6 Dunkin’ Donuts Shops in R.I. Are Sold at Fresh Auction
By Paul Grimaldi, The Providence Journal, R.I.
Oct. 7–PROVIDENCE — In the legalistic equivalent of a do-over, two Massachusetts businessmen bought six Dunkin’ Donut shops in Rhode Island for more than $4 million at an auction yesterday in U.S. Bankruptcy Court.
In August, James E. Allen, of Arlington, and Mark P. Cafua, of North Andover, had apparently won the rights to the six shops in and around Providence when they offered $4,025,000 for the businesses, outbidding a rival group.
But a bankruptcy judge tossed out that transaction amid allegations that the rivals had reached a secret deal on the price in advance of an Aug. 18 auction.
The alleged pact between the two groups of businessmen would have effectively capped the bidding at $3.75 million. The intervention of a lawyer brought the deal to light, ultimately forcing Bankruptcy Judge Arthur N. Votolato to quash the sale.
Votolato ordered the trustee in the case, Andrew S. Richardson, to hold a new auction, which was set for yesterday.
Richardson also referred the matter to the U.S. Attorney’s office for review of potential criminal charges.
A spokesman for U.S. Attorney Robert C. Corrente yesterday said the matter remains under review.
While the U.S. Attorney studied the matter, Richardson received four bid applications for the new auction, including ones from the Massachusetts pair and the three men who were their rivals in the voided auction.
Frank D. Pino and William Rianhard, of North Andover, Mass., and Michael Quinn, of Hempstead, N.H., who had joined to bid in the earlier auction, returned to court yesterday to see if they could win the shops once owned by Irwin Barkan, of Fayston, Vt.
A third investment group, PLB Acquisitions, was represented yesterday by a lawyer.
PLB opened the bidding with a $2-million offer.
A representative for Allen and Cafua’s investment company, A&C Holdings LLC, didn’t hesitate before making the winning bid of $4,025,000 — the same amount they had ended up bidding at the August auction.
Pino and his partners, after conferring with their lawyer, decided not to bid. The fourth applicant did not appear at yesterday’s auction.
“All right, the auction [is] over,” Richardson said.
A short time later, in a hearing before Votolato, Richardson asked the judge to accept the A&C bid.
“I am thoroughly convinced that this is a very fair… value,” Richardson said. “I’m satisfied that this process was not tainted in any way.”
He noted that the bidders had been required to submit affidavits stating that they had avoided contact with each other since the August auction.
Richardson also said that creditors in the case would be fully paid.
When Barkan put the stores into bankruptcy in February, the Vermont businessman claimed that the companies he set up to run the stores owed a combined $4.7 million to creditors, but had only $3.7 million in assets. Included in that $4.7 million was $1.2 million claimed by Barkan or other businesses he controlled.
Estimates from various parties involved in the case put the stores’ combined worth at between $3.1 million and $3.5 million.
In a statement e-mailed to The Journal after the hearing, Dunkin’ Donuts, of Canton, Mass., said, “We are pleased that the auction of Mr. Barkan’s stores was finalized today and are comfortable with the outcome. We look forward to the smooth transition of the stores to A&C Holdings.”
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ALLD, AED,