VOL. 132 | NO. 45 | Friday, March 03, 2017
Legal Dispute Puts Bar Louie's Future in Question
By Patrick Lantrip
A legal dispute involving Bar Louie and Loeb Properties leaves the future of the franchise in Overton Square in question, according to documents filed by both parties with the U.S. Bankruptcy Court Western District of Tennessee.
The documents came to light after Memphis Louie LLC, doing business as Bar Louie Memphis, filed a voluntary petition for Chapter 11 bankruptcy on Feb. 3 in an effort reorganize their existing debt while continuing to operate at 2125 Madison Ave.
In response to the bankruptcy proceedings, attorney Bruce Feldbaum, on behalf of Overton Square South LLC and Loeb Properties Inc., filed a Motion for Relief from Stay and/or for Adequate Protection on Feb. 7.
"Our engagement with Bar Louie is a part of the normal process that we go through when we're working with tenants on payment. These are the standard legal procedures in the State of Tennessee," a representative Loeb Properties said in a statement.
If granted, the motion would allow Overton Square South to continue with its plans to oust the restaurant from its prime location in Overton Square.
“The Debtor had failed to discharge certain monthly rental obligations and other financial obligations and liabilities due to the Creditor in a timely fashion, and a default was declared which resulted in a State Court proceeding being filed for possession of the said premises,” the document read in part.
The motion went on to accuse Bar Louie of filing for bankruptcy to avoid a justified eviction.
“Therefore it is not feasible that the Debtor will be able to propose a plan of reorganization in good faith and that the instant Chapter 11 Bankruptcy was not filed in good faith and was filed merely to hinder and delay the Creditor in enforcing its State Court’s rights to possession of the subject premises,” it went on to say.
On Feb. 17, Michael P. Coury, on behalf of Memphis Louie, filed an objection to Overton Square South’s Motion for Relief from Stay.
In the objection, the restaurant accused their landlord of trying to evict them in order to open the location up for other businesses to occupy.
“Upon information and belief, the Landlord’s action is motivated, not by any tenant defaults, but by its desire to obtain control over the leased premises in order to rent it to other tenants who have an interest in the Debtor’s leased space,” the document said.
According to their objection, the dispute stems from three promissory notes for $189,327, $101,827 and $60,000 that were for leasehold improvements as a part of a June 29, 2012, lease agreement.
“At the time of the filing of the Petition, Debtor was current in the payment of its rent (and promissory note payments) to Landlords. The Debtor acknowledges that it was late in the payment of its January rent due to an internal error in the Debtor’s bookkeeping department which resulted in insufficient funds being payable in its checking account to fund a wire transfer to Landlord. The Debtor would show that the January rent, however, was paid to Landlord via cashier’s check on January 23, 2017. The Debtor paid February rent prior to the filing of this case.”
According the court documents, the outstanding balances as of the date of filing were approximately $133,679, $72,690 and $55,563.
The company’s ability to pay off its debt, they argued, would be impossible unless they were able to remain open.
“The property is necessary to the effective reorganization of the Debtor,” the restaurant claimed. “Pursuant to the terms of the lease, there are in excess of 60 months remaining on the initial lease term. In addition, the Debtor has two options to renew the lease for five-year periods. The Debtor was not in default of any other pre-petition obligations and the filing of this bankruptcy was precipitated solely by the actions of the Landlord in seeking to evict the Debtor.”
Calls to Memphis Louie's attorney have were not immediately returned