Garliz Investments LLC, a Post Falls-based Burger King franchisee that was operating 25 Inland Northwest restaurants when it sought Chapter 11 bankruptcy protection in November, has filed a reorganization plan that would leave it with just 12 or 13 outlets.


The company, which has outlets scattered across Washington, Idaho, and Oregon, received U.S. Bankruptcy Court approval in late December to close seven underperforming locations in its Burger King chain of franchises, and since has closed six of those locations, including one on the South Hill, one in Post Falls, and one each in Cheney, Colville, Clarkston, and Leavenworth, Wash. The seventh, in Pullman, was still open as of last week.


In its reorganization plan, filed March 18, Garliz Investments proposes selling six other Burger King locations to provide a further source of distributions to secured creditors. According to court documents, those locations would be its outlets on Argonne and on Sprague in Spokane Valley, and in Newport and Wenatchee, Wash., Milton-Freewater, Ore., and the Pullman outlet that was previously approved for closure. The Burger King in Airway Heights might also be sold, but court documents dont make that clear. One document shows that outlet as one Garliz proposed to continue operating, but a document filed later lists it as one for which a franchise agreement with Burger King wont be renewed.


Sources in Garliz Investments Post Falls office declined to comment, and Garlizs attorney, James Day, of Bush Strout & Kornfeld, of Seattle, could not be reached for comment.


Of the 12 restaurants the company intends to continue operating, five are located in the Spokane-Coeur dAlene area.


Garliz Investments was formed in 1996 by Manuel and Esther Garcia, whose family, according to court documents, invested more than $1 million into the company. At one time it operated 27 franchised Burger King outlets. In November, Garliz employed about 500 workers at its 25 remaining restaurants, court documents show.


At the time it filed for Chapter 11, Garliz listed total assets of $5.8 million and liabilities totaling $19.3 million. Creditors listed as having the largest secured claims against Garliz were two lenders, GE Capital, of Dallas, and Citicorp USA Inc., of Irvine, Calif. Court documents show Garliz owed GE about $8.5 million and Citicorp about $7 million.


In its filing, Garliz Investments says, This bankruptcy was not a planned filing by Garliz, but a protective response to efforts by Burger King to terminate Garlizs franchise agreements in November 2004.


In documents filed in the case, Miami, Fla.-based Burger King Corp. says Garliz owes it about $2.4 million, most of that total attributed to two Ad Fund accounts. No one from Burger King could be reached for comment.


The proposed reorganization plan provides for a limited license agreement to govern the relationship between Burger King and Garliz concerning the franchises to be sold. How much time Garliz would have to sell those outlets before Burger King could terminate that agreement has yet to be documented in the proposed limited license agreement.


The 12 restaurants Garliz proposes to keep, which it asserts in its plan will result in a net cash flow in excess of $1 million annually that will be committed to distributions to creditors under the plan, include its Francis Avenue and Division Street eateries in Spokane; its Coeur dAlene and Hayden restaurants, in Idaho; and the Airway Heights location. Also on that list are restaurants in Ponderay and Lewiston, Idaho, and in East Wenatchee, Omak, Cle Elum, Othello, and Yakima, Wash.


Garliz owns the land and buildings at four of its Burger King locations, owns just the buildings at five others, and leases both the buildings and the land at the others, according to court documents.


Several creditors have filed objections to the reorganization plan.


Portland, Ore.-based McCabes Quality Foods Inc. asserts in court documents that Garliz owes it more than $650,000 and that its interests arent mentioned in the reorganization plan.


Cherry Hill Orchards of Wenatchee LLC contends in documents filed in court that the proposed plan fails to provide adequate information regarding property lessors and how they would be impacted by the planned limited license agreements Garliz would have with Burger King.


The state of Washington objects to the reorganization proposal, in part because The plan fails to provide for payment of all taxes within six years of the assessment date as required by statute, and what it calls default Mumbo Jumbo that the state rewords in its objection.


Theres no indication in the filing of when the Bankruptcy Court will rule on the proposed reorganization plan.