Bakery dispute leaves Rykalskys exhausted

Bakery dispute leaves Rykalskys exhausted
Carol and Tom Rykalsky inside the Murray Hill bakery.

By Greg Walsh
Resident Community News

A months-long legal battle over ownership of the Edgewood Bakery is taking its toll on the current operators Tom and Carol Rykalsky, their attorney says.

“They are exhausted,” attorney Jack Webb said following a Feb. 20 hearing at the Duval County Courthouse. “They are trying to keep the business going but it is slowly dying.”

The 47-year-old bakery’s finances also are dwindling. Webb said the Rykalskys, who bought the bakery in June with funding from Shad Khan’s Stache Investments, have laid off about six workers and shut down the wholesale bakery operation.

Without financial support from Stache they received until October, the Rykalskys are operating “out of (daily) cash flow,” Webb told Judge James Daniel during the hearing.

An immediate concern before the judge was who will pay a $12,000 liability insurance premium due in late February. An attorney for James Meeks, the bakery’s appointed receiver, said the bill can’t be ignored.

“Right now our perspective is…you can’t have an ongoing operation without liability insurance,” said Meek’s attorney, Lanny Russell of Smith Hulsey & Busey of Jacksonville.

Webb said Stache Investments should have to pay the insurance bill because it paid the prior insurance premiums from a bank account used to pay bakery bills. “The cancellation notice was sent to Stache’s office…it wasn’t even sent to the bakery,” Webb said.

Attorneys for Stache Investments did not respond at the hearing to Webb’s assertion of who must pay.

After the hearing Webb said the insurance premium is another example of Stache forcing the Rykalskys out as owners. “That has been their plan all along,” Webb said. “This is no different than Russia going into Crimea.”

A spokesman for Khan previously denied the billionaire businessman and owner of the Jacksonville Jaguars had any interest in owning a bakery. Instead it was about having the business operated correctly and be financially successful.

In early February, the judge heard testimony from Charles Wiggins, a University of North Florida business professor and financial analyst who was hired by Stache Investments to review the bakery’s finances. Wiggins testified the bakery had a financial value of $0 and was in debt for more than $1 million.

Judge Daniel issued a preliminary finding in January stating that Stache Investments is the majority owner. At the Feb. 20 hearing, Judge Daniel told Webb he was unwilling to reopen that finding unless there is “new evidence” to review.

Stache Investments loaned the Rykalskys $800,000 in June 2014 to buy the bakery and pay off lingering costs related to their company, U.S. Culinary & Beverage. In October, Stache notified the Rykalskys they had violated the terms of the purchase agreement and issued termination notices to them and all employees.

The Rykalskys ignored the notice, prompting Stache to file suit in December. Stache Investments urged the court to immediately appoint a receiver while the ownership issue was resolved; the Rykalskys and their partner, Mike Zimmerman, countersued, saying they never agreed to give Stache Investments majority ownership.

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

You must be logged in to post a comment Login