An attorney representing former Upper Crust workers in a class-action lawsuit, former Upper Crust managers, and a private equity firm with ties to company founder Jordan Tobins are among the bidders for the bankrupt pizza chain which heads to auction on Wednesday.
More than 60 parties — including national brands and small businesses — initially expressed interest in making a bid for the gourmet pizza company, according to Mark G. DeGiacomo, the trustee overseeing the bankruptcy of Upper Crust. But DeGiacomo would not identify the number of proposals submitted by Monday’s deadline, except to say, “We’re very pleased with the amount of bids and expect a lively auction.”
Among the bidders will be Shannon Liss-Riordan, who filed a lawsuit against Upper Crust in 2010 on behalf of immigrant workers who claim the company exploited employees and took back wages. She submitted a proposal on Monday with another investor for the Harvard Square location. If they are the winning bid, they plan to give employees ownership shares in the restaurant.
Liss-Riordan acknowledges it’s unusual for a lawyer to go into business with her clients, but said she has not found any conflicts with the proposal.
“The plan is for employees to have ownership shares, and we are very excited about this,” she said. “This will be a great opportunity to show how a business like this can work for the benefit of the employees, and this will be an exciting opportunity for how this story could end on a better note.”
After years of financial and labor troubles, Upper Crust filed for bankruptcy protection in October and a trustee shuttered 10 locations in November because the company had few supplies and little cash after executives paid themselves a month’s salary in advance. Upper Crust, which expanded rapidly over the last decade, said it owes at least $3.4 million, including more than $500,000 to a Brookline construction firm. The US Department of Labor has also filed a claim against the pizza chain for roughly $850,000 in back wages and damages that are owed to employees.
Interested investors can make offers for leases on individual locations, as well as for multiple stores and related assets, or the entire business. Two former Upper Crust managers confirmed they submitted a bid with a seasoned Boston restaurateur to purchase two locations, one in the city and another in the suburbs. They did not want to provide more details until the auction, which will be held in Boston, is completed.
Pizza chain auction
Jordan Tobins, who founded Upper Crust in Beacon Hill in 2001 but was placed on leave this year after being accused by co-owners of misusing company funds for personal expenses, is working with a private equity firm that has made a bid for several Upper Crust restaurants, according to an attorney representing Tobins. An official for the firm, Ditmars Ltd., declined to identify the locations it is pursuing.
Tobins controls two restaurants that remain open in Brookline and on Beacon Hill. Four independently owned franchise locations that are not part of the bankruptcy are still operating in Plymouth, West Roxbury, Newburyport, and Portsmouth, N.H.
As Upper Crust quickly expanded its pizza empire over the past decade, it relied on a steady flow of immigrant workers from the poor village of Marilac in Brazil, according to a Globe investigation published in 2010.
Upper Crust’s problems began surfacing in 2009 when it was ordered by the federal government to pay employees nearly $350,000 in overtime, following an investigation by the US Department of Labor.
Tobins and other executives then allegedly devised a plan to take back the money by reducing employees’ wages or firing them if they refused to return the federally mandated compensation.
That prompted a class-action lawsuit filed by Liss-Riordan on behalf of former employees, as well as a second Labor Department investigation. A trial date for the lawsuit has been set for next summer.