Franchised fresh salad restaurant chain Saladworks has filed for bankruptcy protection in a bid to extricate itself from a legal battle with Commerce Bancorp founder Vernon Hill II, who owns 30% of the company.

Saladworks President Paul Steck said in a court filing that bankruptcy protection will let the company “focus on its restructuring free from the value-destructive, distracting litigation” in which it is currently involved with Hill.

The bankruptcy petition disputes two debts that Hill has been trying to collect from Saladworks, including one resulting from his acquisition of 30% of Saladworks for $7.75 million in March 2008.

“Saladworks has determined that the best way to maximize value for its stakeholders is through a sale or recapitalization,” the company said in a news release. “To ensure the most efficient process possible and to optimize the potential results for all parties, the company has determined to conduct its restructuring process under the supervision of the U.S. Bankruptcy Court.”

According to The Wall Street Journal, Saladworks, which was founded in 1986, has 149 franchise agreements signed up, but has been struggling to sell additional franchises due to the litigation in Delaware and Pennsylvania between majority owner John M. Scardapane and Hill.

After Hill resigned from the Saladworks board in 2013, he exercised his right to have Saladworks buy his stake back for $7.8 million. He sued in Delaware in October to force Scardapane to make that payment. Bankruptcy documents show his total claim is worth $8.9 million.

The Pennsylvania litigation involves an effort by Metro Bank to collect $2.5 million from Saladworks. According to Nation’s Restaurant News, a company called WS Finance LLC, which Saladworks believes is owned by Hill, bought the Metro Bank debt and is now listed as the creditor.

Saladworks bills itself as the nation’s first and largest fresh-tossed salad franchise concept. None of the Saladworks locations or affiliates are involved in the bankruptcy and they will continue to operate normally, the company said.

Featured image: Saladworks

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