A kitchen remodeling company is trying to block the co-owner of a Poughkeepsie franchise from using bankruptcy to cancel a $750,000 debt.
Kitchen Tune-Up, of Aberdeen, South Dakota, sued Brian J. Hill, Poughkeepsie, on Feb. 18 in U.S. Bankruptcy Court.
Hill filed for Chapter 7 liquidation last August, declaring $380,832 in personal assets and $1,154,912 in liabilities.
Kitchen Tune-Up claims that Hill may not use bankruptcy protection to discharge his franchise debts because they were amassed fraudulently.
Hill’s bankruptcy attorney, Greg Dantzman, did not reply to a message asking for his client’s side of the story.
Kitchen Tune-Up has nearly 200 franchises in the United States and Canada, according to it website. It pitches a “low investment, branded business designed to help you reach your financial dreams” by tapping into the $400 billion home improvement market.
In July 2021, Hill, and Tim and Laura McLaughlin, of Hopewell Junction, bought a franchise for the Poughkeepsie and Mahopac territories. They set up shop as Kitchen Tune-Up of Poughkeepsie in the Summerlin Plaza, Wappingers Falls.
Hill owns 50% of the franchise, according to his bankruptcy petition, and the McLaughlins own the rest.
Kitchen Tune-Up claims that by October 2022 Hill knew that the business was financially stressed. By the end of 2022, he was allegedly using franchise funds to pay personal expenses, such as pet grooming, auto insurance and a car lease.
Even when he knew he was going to file for bankruptcy protection and close shop, Kitchen Tune-Up claims, Hill continued to accept new customers and use customer deposits for personal expenses.
He took in $511,842 in deposits from 34 customers, according to the complaint, without providing services or products, “leaving customers cheated” and harming “the Kitchen Tune-Up goodwill and brand.”
Last July, Kitchen Tune-Up demanded that the franchise return all customer deposits or complete the unfinished jobs, the complaint states, but customers continued to lodge complaints.
Kitchen Tune-Up says Hill owes $419,506 in franchise fees. And it expects that it will have to cover $261,702 in customer deposits and $67,246 in loans, for a total of $748,455.
Hill’s bankruptcy petition lists a $300,000 debt to Kitchen Tune-Up.
Kitchen Tune-Up’s attorney, Morris S. Bauer, of Newark, New Jersey, argues that Hill’s debts may not be discharged in bankruptcy because they resulted from fraud, willful and malicious conduct, and failure to properly maintain financial records.
