LITTLE ROCK — The owners of Bath Junkie Inc. of Fayetteville have filed Chapter 11 bankruptcy, citing a court case brought by one of its franchisees that resulted in writs of garnishment on three of Bath Junkie's bank accounts.
Judy Zimmer, chief executive officer, and Jon Zimmer, secretary, listed both assets and liabilities of between $1 million and $10 million in the filing earlier this month in U.S. Bankruptcy Court in Fayetteville.
The Zimmers started the company in 1996 and began franchising their operation in 2000. It has grown to about 60 stores in 17 states and Puerto Rico.
In Arkansas, Bath Junkie has stores at the Northwest Arkansas Mall in Fayetteville, Pinnacle Hills Promenade in Rogers, Eureka Springs, the River Market District in Little Rock and in Russellville. The firm's largest market is Texas, where it has 23 locations.
The bankruptcy reorganization filing shows Bath Junkie Branson LLC, one of its franchisees and the largest creditor, owed $95,000. Two years ago, the Branson outlet won a judgment for that amount against Bath Junkie in a lawsuit filed in 2004 claiming fraudulent business practices.
In the bankruptcy filing, the Zimmers say the writs of garnishment on behalf of the Branson franchisee led to the bankruptcy filing.
The Zimmers' attorney, Theresa Pockrus of Fayetteville, did not return a telephone call Thursday.
Bath Junkie sells a variety of body washes, shower gels, hair conditioners, bath salts and massage oils.
The filing says that the Zimmers "have reason to believe that additional litigation will be pursued against the Bath Junkie entities." It says the Zimmers were in the process of dissolving their other corporate entities, which include Bath Junkie Distribution Inc., Bath Junkie Corporate Store Inc. and Bath Junkie Franchise Inc.
Other creditors in the caseinclude Dell Financial Services of Austin, Texas, $56,722.45; Mulberry Associates LLC of New York, $51,193.91; CVM Holdings LLC of Raleigh, N.C., $48,000; and Morris & Reeves, a Bella Vista law firm, $29,891.
According to the company's Web site, franchisees pay a fee of $45,000 plus royalties of 5 percent of sales and typically invest $110,000 to $210,000 to get their businesses started.
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Business, Pages 27, 28 on 09/25/2009