Tully’s creditors seek to force parent of embattled coffee chain into bankruptcy

Three landlords and a former Tully’s store manager who are collectively owed more than $200,000 in unpaid rent and other legal judgments jointly filed a petition in federal court in Seattle on Wednesday seeking to force the embattled coffee chain tied to celebrity lawyer Michael Avenatti into bankruptcy.

By filing the petition for involuntary Chapter 7 bankruptcy against Tully’s Seattle-based parent company, Global Baristas US, the four creditors are essentially pressing the recalcitrant coffee chain to address a long list of overdue debts.

“It’s a way to force people to pay on obligations,” said Matthew Cunanan, a lawyer representing  former Tully’s store manager Beth Eno, one of the petitioning creditors. “It is unusual, we don’t typically do this. But when you have an experienced attorney that is seasoned and hiding money and refusing to pay out on legal obligations, judgments and contractual obligations, it’s a mechanism we use to hopefully ensure these payments actually take place and happen.”

In a phone call, Avenatti denied Wednesday any further involvement with Global Baristas or Tully’s.

“None of this is my problem,” he said. “You’ll have to contact the owners of Global Baristas. I sold the company for $28 million in cash a long time ago. I’m not responsible for any of this; it’s never been my responsibility.”

All of the petitioning creditors have won court judgments against Tully’s, but have yet to receive payment. They include the property management firms Benenson Bellevue II, Skymatt Properties and SP Partners III, which for years separately leased commercial spaces to Tully’s stores in Seattle and Bellevue. The coffee chain failed to pay the landlords a combined $80,000 after it abruptly began shuttering its stores beginning late last year, according to court records.

The fourth creditor to join the petition is Eno, an ex-manager of Tully’s Alki Beach store who claims she was fired in 2016 after informing her boss she was pregnant. Eno later sued her former employer, winning a default judgment of $120,585.

The petitioners are among dozens of landlords, vendors and other creditors who’ve won judgments for unpaid rents, goods and services after Tully’s spiraled into financial trouble and halted retail operations.

Amid the turmoil, Avenatti, who had been Tully’s principal owner for several years, separately rocketed to fame as the lawyer for porn star Stormy Daniels and a chief nemesis of President Donald Trump. Avenatti has since become a fixture on cable TV shows and is exploring a 2020 presidential run.

Ownership of the dormant Tully’s chain has been shrouded in a tangle of shell companies with ties to Avenatti, whose investment firm initially bought the bankrupt company for $9.15 million at auction in 2013. Amid the troubles in recent months, Avenatti repeatedly has disputed that he still owns the company but he won’t identify its purported new owners to The Seattle Times.

Avenatti described the new owners only as a “conglomerate” on Wednesday but declined to identify any names or provide contact details.

“I’m not at liberty to provide that information,” he said.

Washington state online corporation registration records still show Avenatti’s name listed as the governing person of Global Baristas, which, in turn, governs Tully’s similarly named parent company, Global Baristas US, LLC. During a deposition in July 2017, Avenatti testified that his Newport Beach, California-based law firm wholly owned Doppio Inc., a Delaware corporation that he said controlled 80 percent of Global Baristas. As recently as February, Doppio still owned Tully’s parent company, according to records filed in a federal lawsuit against the coffee firm.

Several Tully’s creditors who have since tried to collect on debts have said their calls, letters and lawsuits largely went ignored, and Global Baristas has repeatedly opened and closed bank accounts in an apparent effort to hide assets and thwart creditors’ attempts at garnishments to recoup unpaid court judgments.

“It’s been next to impossible to find where he’s keeping the money,” Drew Davis, a lawyer who represented Eno at the time, told The Times earlier this year.

Wednesday’s involuntary bankruptcy petition applies further pressure. While most bankruptcy cases are filed voluntarily by individuals or companies facing money troubles, sometimes creditors seek to force the issue against an uncooperative debtor. Creditors who meet a set of conditions can use the petition as a tool to start a time clock against a debtor, which gets 20 days to respond or contest the petition.

The court ultimately will decide whether to move the petition forward and declare the debtor bankrupt.

Avenatti’s business dealings in Washington also have prompted an investigation by the California State Bar of an opposing lawyer’s complaint, including allegations that his coffee firm fleeced millions of dollars in state and federal tax withholdings from the paychecks of Tully’s employees. Avenatti has denied those allegations.

The involuntary bankruptcy petition in Washington comes two days after Avenatti was hit with separate judgments in California courts, ordering him to pay a former law partner $4.85 million and evicting his law firm, Eagan Avenatti, from its office space due to unpaid rent. Avenatti told a reporter on Monday that he doesn’t own Eagan Avenatti, but refused to identify the new owner.