Show up to work to find yourself out of a job

Yup. The economy is starting to look like this: Employees at Roadhouse grills all over the Southeast showed up for work today to discover they had no jobs, and maybe no final paychecks. The picture included on this post is of a chained up front door to a Roadhouse Grill near where I live (I do not work for Roadhouse). Check out the story from the Palm Beach Post:

Friday, May 16, 2008

WEST PALM BEACH — With the swing of a gavel Tuesday, Roadhouse Grill was gone.

The restaurant doors were chained shut without notice. Employees were left without final paychecks. Assets were abandoned.

It was not how John Metz wanted the deal to go down.

The West Palm Beach turnaround man who bought the beleaguered steakhouse chain last fall was reportedly just two weeks away from a sale that could have paid the rent and kept an estimated 2,000 workers on the payroll.

But lawyers on the case said tighter bankruptcy deadlines and increasingly impatient landlords turned Roadhouse into roadkill.

When a loan to cover unpaid rents fell through, Roadhouse was forced this week to shut down its restaurants and liquidate its assets, Craig Kelley, Roadhouse's West Palm Beach attorney, said Friday.

A few more days could have changed the story.

The fine print of a 3-year-old change in bankruptcy law gave Roadhouse until May 5 - 210 days after it filed for Chapter 11 bankruptcy protection in October - to agree to pay $1.25 million in unpaid rents, Kelley said.

Landlords in six states, including Florida, weren't budging. A U.S. bankruptcy judge gave the company until May 9 to fork over the cash

With that deadline looming, Kelley said a big-money buyer, a publicly traded company he declined to name, was circling, willing to pay an estimated $4 million for the steakhouse.

But now? It's worth zip. Not even the restaurants' equipment and furnishings are valuable enough to auction off.

"The landlords are not going to get paid. They'll get their properties back, but they won't be paid," Kelley said.

Tampa investor MCF Development LLC was going to lend Metz the $1.25 million, but the two couldn't agree on terms in time. The money was waiting in escrow when the judge said time was up, Kelley said.

Without the cash, Roadhouse had to give up the leases and convert to Chapter 7 bankruptcy.

Roadhouse's 21 remaining locations, including restaurants in Delray Beach and Greenacres, were closed overnight after the ruling Tuesday. Employees showed up Wednesday morning to find chains on the doors.

"We had no choice but to close it down immediately," Kelley said. "We had to chain the doors, because if steaks and bottles of booze started walking out the door, Roadhouse's principals would be personally liable."

Boca Raton trustee Robert Furr was appointed to liquidate the company's assets. On Friday, he said he would have to abandon the equipment and furniture left at the 21 restaurants. Auctioneers said they could have brought about $20,000 at each location, but it would have cost more than that to set up the sale, Furr said.

Remaining assets amount to little more than $75,000 in cash, Furr said. That means that it is unlikely the out-of-work employees will ever get their final paychecks.

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So I got to talking with my brother, the CPA, about information for this blog. As I write, I'm perusing websites on the financial crisis, and I realized I've been focusing on the concrete examples I see daily: the real estate mess, etc. There's a whole shadow financial world that is also in crisis, and the cause is pretty clear. It has nothing at all to do with 0ne given thing, but a perfect storm of problems all peaking at the same time.

I recently stumbled upon a set of videos starring Lindsey Williams and the Energy Non-Crisis. This was shot in 2006, and is quite scary. I'm posting only the first part (of 9) , but you can follow the youtube chain and see the other 8. Good stuff.