In the bankruptcy case of the little Spanish sandwiches, a big fight is heating up.

During a hearing last week, a federal judge said the South Florida franchise of 100 Montaditos could shut down despite the bankruptcy filing of the Spanish restaurant’s U.S. arm.

The ruling was basically a formality—the bankruptcy code might have prevented the franchisee from shutting down his operations without the judge’s approval—but it preserved the ability of franchisees and the company to take legal action against each other in the future.

And further legal action is something that franchisees are planning, said Leon Hirzel of Hirzel Dreyfuss, a lawyer for a group of current and former franchisees. Mr. Hirzel declined to provide more details on the nature of the coming action.

“The bankruptcy is an attempt to absolve liability across the Atlantic Ocean,” he said, referring to 100 Montaditos’ Spanish parent company. Mr. Hirzel says the Spanish company never adequately capitalized the U.S. spinoff, an allegation the parent firm denies.

...Story Continued via The Wall Street Journal