Southern Season, the Chapel Hill gourmet food emporium, named a new CEO on Friday, resolving a business disagreement that was clouding the company’s 2-month old bankruptcy case.
Southern Season named Dave Herman, president and chief operating officer, as the new CEO. Herman replaces outgoing CEO, Clay Hamner. The Chapel Hill entrepreneur has headed Southern Season since his firm, TC Capital Fund, acquired the company in 2011.
Herman said Southern Season will now focus on selling itself to raise money and emerge out of bankruptcy. The company filed for Chapter 11 protection in June, at that time reporting $18.3 million in liabilities.
The CEO shakeup took place ahead of an Aug. 18 bankruptcy court hearing that could have exposed deep rifts between the company’s owners and investors over strategy and financing.
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The sale of Southern Season had been demanded by the largest creditor in the bankruptcy, Summit Bridge, which is owed $4.4 million. The investment firm said last month in a bankruptcy court hearing that it would oppose any more emergency financing for Southern Season unless the company put itself up for sale. So far, Southern Season has received $1.4 million in loans since the bankruptcy filing.
“We’re going to sell the company,” Herman said, signaling the company’s direction. “The purpose of the sale is to get the financing to get us out of Chapter 11.”
At the bankruptcy hearing, Summit Bridge’s lawyer raised concerns about Southern Season receiving a loan from Silk Route Capital, one of the original investors in the 2011 purchase of the company. And he questioned how Hamner, as an investor and manager of Southern Season, could negotiate a loan with Silk Route Capital in which he also had a role. Southern Season’s lawyers told the judge that Hamner no longer has any role with Silk Route.
Herman said the sale “could be to new people, could be to current investors – we’ll look for the best value.”
Hamner could not be reached for comment. In Southern Season’s statement, Hamner offered support for his successor.
“I am excited that Dave will lead the company,” Hamner said. “I am very pleased that we will be able to retain over 300 jobs for our great staff under Dave’s leadership.”
As part of the bankruptcy strategy, Southern Season has delayed plans to expand its online retail business and to open two smaller stores, called A Taste of Southern Season. The flagship store in Chapel Hill remains open, as do three A Taste of Southern Season stores, including one at Cameron Village in Raleigh.
Herman said about 85 percent of Southern Season’s vendors continue shipping products, but some are upset over not being paid and have stopped doing business with Southern Season.
Founded in 1975, Southern Season is known for its wide variety of gourmet selections, an on-site restaurant and popular cooking school. The company this year shut down stores in Richmond, Va., and Mount Pleasant, S.C., which could not replicate the flagship store’s success.
John Murawski: 919-829-8932