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VOL. 124 | NO. 116 | Tuesday, June 16, 2009

Bankruptcy Judge Rejects Beale Street Hip-Hop Club

By Bill Dries

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CLOSED INDEFINITELY: The old Pat O’Brien’s on Beale Street remains shuttered after a federal bankruptcy judge rejected a plan to reopen the nightspot as Liquid on Beale, a club to be run by Curtis Givens, founder of a troubled hip-hop nightspot in Hickory Hill. -- PHOTO BY BILL DRIES

A federal bankruptcy court judge has scrapped plans to reopen the old Pat O’Brien’s on Beale Street as a two-day-a-week nightspot with a dress code.

The plan by Cato Walker and Curtis Givens to open “Liquid On Beale” drew opposition from Beale Street developer John Elkington and his Performa Entertainment Real Estate Inc., as well as the Beale Street Merchants Association.

The opposition in court was based on Givens’ financial record as operator of the old Club Premier on American Way. Outside court, Elkington and the Merchants Association also expressed concern over a string of violent incidents at that and other clubs Givens has owned.

The plans for 310 Beale and the controversy were first chronicled in the May 30 cover story of The Memphis News.

Viability issues

Hurricane Memphis LLC defaulted in 2007 on a $2.5 million promissory note from Wachovia Commercial Mortgage Inc. Wachovia instituted foreclosure proceedings and Hurricane filed a Chapter 11 bankruptcy petition in May 2008 just ahead of a planned foreclosure sale. Four months later, Pat O’Brien’s closed.

In an earlier ruling, federal bankruptcy judge George W. Emerson Jr. said Performa had the right to veto a sublease to a third party “if that third party does not appear to be a viable business.”

A sublease is vital to Hurricane Memphis LLC for it to continue to pay Wachovia.

As Emerson was considering the amendment to the Pat O’Brien’s bankruptcy reorganization petition this month, a patron at Givens’ Level II nightspot at 5020 American Way was shot and wounded inside the club.

Givens opened Level II in April 2008 in the former location of the Club Premier. His admission of an ownership interest in Level II as he was questioned by the attorney for Performa could come back to haunt Givens. He made no mention of the ownership interest in his Chapter 7 bankruptcy petition.

Givens owes the Tennessee Department of Revenue $400,000 in sales taxes as well as interest and penalties, according to a state audit of Club Premier finances.

The club closed in July 2007. Violence at the Premier led to several lawsuits against Givens or the business, which prompted him to close it and file for bankruptcy.

Needle in a haystack

A Memphis police report from the June 7 incident at Level II was added to the court filings in the Beale Street matter.

Security guards at the nightclub initially denied anyone had been shot, according to the police report.

But police noticed an office door near the front of the club that was being guarded closely.

“Reporting officer observed a male go in the office and attempted to shut the door behind him, at which time officer was able to grab the door and gain entry,” the report reads.

Inside employees denied knowing anything about anyone who was injured.

“Employees were advised to stop hiding the victim and to allow the paramedics to treat her,” the report reads. “Officers were prepared to search the building for the victim when security advised they found her.”

She was hidden in a storage closet in the office that initially caught the attention of officers.

The unidentified woman had an entry and exit wound from a small caliber bullet and was treated by paramedics.

A club employee with the woman when she was discovered continued to deny it was a gunshot wound. Because of the delay in getting to her, most of the club’s customers had left and “no witnesses could be found,” according to the report.

Emerson denied a motion to reopen the case to consider the incident, saying he had already decided the matter on the lack of a viable business plan.

“The plan hinges on the success of a tenant who did not demonstrate to the court any reasonable assurance that it was commercially viable,” he wrote.

Emerson specifically rejected a sublease to Urban Enterprise Management LLC, the company that lists Cato Walker as the managing member and Givens as the vice president of operations or day-to-day manager.

Plan B

Walker and Givens estimated it would take $400,000 to get the building ready to open as a new nightclub. But none of that has been raised.

Emerson also cited Given’s six-figure debt to the state revenue department and past financial problems.

“The individual responsible for the day-to-day management of the tenant has filed bankruptcy recently, and, as admitted in court, has issues with full disclosure,” Emerson ruled.

An income and expense summary from Level II that is part of the bankruptcy proceedings shows Level II took in $1.1 million from its opening in April 2008 to the end of 2008.

Gibbons used more specific financial data from Level II to work up projections on how much Liquid on Beale might make. But Givens refused to provide the more detailed financial data to Wachovia or the court, claiming it was proprietary.

The failure of Urban Enterprise to secure the lease may keep Givens off Beale Street. But he and Curtis Wegener, a principal of Hurricane, are working to open another nightspot later this year at 200 Linden Ave., two blocks south of Beale.

PROPERTY SALES 51 180 16,377
MORTGAGES 21 57 10,144
BUILDING PERMITS 103 665 39,209
BANKRUPTCIES 31 107 7,704