Denny’s franchisee abruptly closes Burnsville, other Minnesota and Wisconsin locations
BURNSVILLE MN: - The Denny’s restaurant in Burnsville has permanently closed as part of a sudden shutdown of several franchise locations in Minnesota and Wisconsin, with the franchise operator citing mounting debt and an inability to continue meeting payroll and other operating expenses.
A notice posted at the Burnsville restaurant says MI5 Inc., the franchise operator, permanently closed its Denny’s restaurants effective at 7 a.m. Sept. 3. Employees were notified one day earlier that their employment would end when the restaurants closed.
The company said it had borrowed substantial amounts of money over the past year in an effort to maintain restaurant operations, meet expenses and preserve employee jobs. According to the notice, the resulting debt became unsustainable, while collection activity by certain lenders significantly reduced the revenue and cash available to operate the restaurants.
As a result, MI5 Inc. said it could no longer meet payroll, purchase necessary food and supplies or continue operating responsibly.
The franchise closures include Denny’s locations in Burnsville, North Branch, Maplewood and Roseville, Minnesota, as well as Hudson, Wisconsin.
Other Denny’s restaurants in the Twin Cities are not part of these closures. Those locations are operated by different franchisees and are separate from MI5 Inc., meaning the shutdown does not represent a broader closure of Denny’s restaurants across the Twin Cities.
MI5 Inc. also told employees it has retained bankruptcy counsel and currently anticipates filing for Chapter 7 bankruptcy liquidation. The company warned that it could not guarantee sufficient funds would be available to cover all outstanding and final payroll obligations.
The company said it will prepare a complete record of amounts employees have earned but have not been paid. If compensation remains unpaid, employees would retain claims against MI5 Inc., according to the notice. Certain qualifying employee wage claims may receive priority under federal bankruptcy law, although the company said it could not guarantee whether or to what extent those claims would ultimately be paid.
Employees were also encouraged to promptly apply for state unemployment benefits.
A separate notice posted at the Burnsville restaurant informed customers that the location was permanently closed and thanked guests and employees for their support, hard work, friendship and memories over the years.
MI5 Inc. said employees will receive additional information regarding the anticipated bankruptcy proceeding after a case is filed, including the bankruptcy court, case number and trustee information.