Skippers wants off the hook for unpaid taxes

EDMONDS – Skipper’s Inc., which operates 59 seafood restaurants in five Western states and once had nearly four times as many, has filed for Chapter 11 bankruptcy protection, largely because of unpaid federal taxes.

Based in Edmonds, Skipper’s filed for reorganization this week in U.S. Bankruptcy Court, listing the Internal Revenue Service as its biggest creditor with $2 million in unpaid federal employment taxes and penalties out of $6.7 million in debt.

The company, which employs more than 500 people, most of them part-time, also plans to close five of its Skipper’s Seafood ‘n Chowder House restaurants, one each in Seattle, Tacoma, Ellensburg, Anchorage, Alaska, and Medford, Ore.

Bankruptcy protection would allow Skipper’s to break long-term leases on the five unprofitable stores and on six others that were closed earlier, said James Day, the company’s lawyer.

“The company has been carrying underperforming locations for quite some time and was unable to close them because of long-term lease commitments,” Day said.

Of the 54 remaining outlets, 32 are in Washington state.

Four other Skipper’s restaurants are operated under franchise agreements, and the company also sells a line of clam chowder, tartar sauce and other packaged products through retail outlets.

Kenneth Williams, principal owner of Skipper’s, said in a declaration filed in court that neither he nor other principals knew federal employment taxes went largely unpaid for more than a year after an outside firm was hired to take over accounting functions.

After the IRS called, Williams said, he borrowed $750,000 against personal assets to begin resolving the problem.

He accused former Skipper’s finance director Eric Li of arranging to “cover up the accruing tax debt” through false financial reports to senior managers and owners, adding that Li “abruptly disappeared” a month after the problem became known and left $6,000 in unclaimed salary and vacation.