Karcher Misses Friday Deadline to Repay $4.8-Million Bank Loan

Carl N. Karcher, the embattled founder of the Carl’s Jr. fast-food chain, failed to meet Friday’s deadline to repay a $4.8-million loan to a Santa Ana bank.

And, in a new development, a partnership that includes one of Orange County’s most prominent motel owners has sued the ousted chairman of Carl Karcher Enterprises Inc. for $38,400 in back payments owed on a long-term lease for restaurant property near Disneyland.

The larger of the two problems is Karcher’s default on the personal loan from Commerce Center Bank in Santa Ana, which now has the option of selling 600,000 shares of Karcher Enterprises stock pledged as collateral. Such a sale, which Karcher’s lawyer has said would be a worst-case situation, would lower Karcher’s stake in the company he founded to about 31%, down from 34%.

The Commercial Center loan is one of two personal loans on which Karcher has defaulted. Another 3.98 million shares of his stock in Karcher Enterprises are backing a $25.1-million loan from Union Bank.

Negotiations continued Friday with both banks and are “moving in the right direction,” Karcher spokesman Steven Fink said. “Progress is being made on both fronts. . . . We may have something to tell, something positive, next week.”

As Karcher works to resolve the bank loans, he must now contend with the demand for payments due on a lease for property in Anaheim where he once operated a restaurant. The Apollo Inn partnership, which includes well-known Anaheim motel owner James Stovall, filed a lawsuit Thursday in Orange County Superior Court in Santa Ana against Karcher as trustee for his family trust.

Under a 1984 lease, Karcher was required to pay $2,400 a month for a restaurant site on Katella Avenue across the street from Disneyland. Karcher used to operate a family eatery there that was part of a chain called Sunshine Broilers, said a person familiar with the lawsuit. A Denny’s restaurant now operates on the site.

Fink said that he and Karcher’s lawyer had not seen the lawsuit late Friday and could not comment.

Karcher, who founded Carl’s Jr. in 1941, was ousted as chairman on Oct. 1 by the restaurant chain’s directors.

Karcher has vowed to unseat the board and regain control. Sale of the stock held as collateral by the two banks would hurt his chances of doing so.

Commercial Center Bank in Santa Ana typically takes possession of any stock that is pledged as collateral for loans and, in the event of default, turns the stock over to a broker to sell, said David Blankenhorn, the bank’s president. He wouldn’t discuss the Karcher loan specifically.

Times staff writers John O’Dell and Mark Landsbaum contributed to this report.