Down House Ventures, the legal entity behind Treadsack’s oldest Heights-area technically-a-private-club, has filed for bankruptcy this morning, lagging just a few days behind last week’s Bernadine’s and Hunky Dory filings. The company preemptively included Down House in a Facebooked list of Treadsack restaurants that would stay open for now despite the legal and financial question marks now hanging over the company, given the sudden mid-winter departures of side-by-side restaurant and bar duo Foreign Correspondents and Canard and the details of payroll and tax issues subsequently dredged up; D&T Drive Inn and Johnny’s Gold Brick were placed on the still-truckin’ roster as well. This morning’s filings also look to have included a motion asking for funds to pay current Down House employees, as Craig Malisow reports was granted in the case of last week’s Chapter 11 initiates.
Photo: Down House
Going Down in the Heights
HUNKY DORY AND BERNADINE’S ARE NOT DEAD YET In a statement posted simultaneously yesterday to the Bernadine’s and Hunky Dory Tavern Facebook pages, Treadsack’s management team says the twin restaurants at 1801 N. Shepherd (along with the company’s remaining establishments: Down House, D&T Tavern, and Johnny’s Gold Brick) remain open — and that it’s hoping customers will support the decision by continuing to eat there: “We’ve filed Chapter 11 Bankruptcy for Hunky Dory and Bernadine’s so we can restructure our debt and continue to operate. This was a very difficult decision, and not one we came to lightly, but the chance to save the businesses that all of our employees have worked so hard to build and so many of you, our guests, have supported, made it a risk worth taking. We love these restaurants and will continue to fight for them.” [Eater Houston; previously on Swamplot] Photo: Hunky Dory
WE’VE REACHED CHAPTER 11 IN THE HUNKY DORY, BERNADINE’S STORY Here’s an update to continuing reports on the financial health of the Treadsack restaurant group, the company behind Heights-area establishments Down House, D&T Drive Inn, Johnny’s Gold Brick, Hunky Dory, Bernadine’s, Foreign Correspondents, and Canard: Mothership Ventures, LLC, an entity owned by Treadsack partner Chris Cusack and — according to Houston Press reporter Craig Malisow, the business entity that operates as Bernadine’s and Hunky Dory — filed for Chapter 11 bankruptcy protection over this past weekend. Foreign Correspondents and its next-door-neighbor bar Canard closed for business in the shopping center at 4721 N. Main St. suddenly at the end of last year; in February, Malisow published a detailed saga of payroll and tax problems behind the shutdown, alleging Treadsack restaurants had become subject to IRS and state liens totaling more than $1.3 million, and that at one point the Texas Comptroller’s office had threatened a seizure of assets at Down House if taxes were not paid. Bernadine’s and Hunky Dory have been operating since late 2015 in a new building constructed for them at the corner of 18th St. and N. Shepherd. Update, 1:30 pm: An investor has filed suit against the owners of Treadsack, the Houston Press now reports. Craig Malisow also notes that the debtor in the bankruptcy filing has been granted funds to pay for the next employee paychecks. Photo: Hunky Dory
HANCOCK FABRICS FOLDS, PREPARES TO SHUT DOWN ALL STORES Following yesterday’s sale of the company’s assets in bankruptcy court, Hancock Fabrics announced going-out-of-business promotions at all 8 locations in and around Houston, including Conroe, Katy, Clear Lake and Baytown. The Mississippi-born fabric store, which closed some outposts and reorganized under a previous Chapter 11 filing back in 2007, is now liquidating merchandise at all remaining stores nationwide, writes Dennis Seid. The company opened in 1957; as for how long the final sales will stretch out, an associate at the Gulfton store says that employees aren’t sure — “It could be July, it could be tomorrow.” [BizBuzz] Photo of Hancock Fabrics at 5867 Bissonnet St.: Edgar V.
COMMENT OF THE DAY: THE ART OF SLIPPING AWAY “The luxury real estate article says that a lot of owner/CEO’s of small oil companies are selling their mansions to help save their companies. That’s an assbackwards way — there’s a reason you stash a few million in your homestead: It’s exempt from creditors and bankruptcy. Let the dying company fold, file bankruptcy, sell the house later, and boom, you’re liquid again and start with fresh paper and zero liabilities.” [commonsense, commenting on The Typical Home Buyer’s Salary; Getting Creative in the Luxury Housing Market] Illustration: Lulu
FALLEN SPORTS AUTHORITY FILES FOR BANKRUPTCY, PREPARES FOR 140-STORE SHUTDOWN Sports Authority filed for Chapter 11 bankruptcy this morning, after some January lay-offs and a multi-million-dollar missed interest payment. Sports Authority had already announced the planned closure of some 140 underperforming stores; employees at a Dallas branch were told in February that all Texas stores would close, including the 11 in and around Houston. The company now says those closings will occur over the next 3 months; CEO Michael Foss told the Denver Post that the timeline will hopefully give the 3,400 employees anticipated to be let go “plenty of time to find their next opportunity, whether it’s in the company, or wherever else it is.” [Denver Post; previously on Swamplot] Photo of Sports Authority in Portofino Shopping Center: Woodlands Monocle
UNDERMINED SPORTS AUTHORITY TO ABANDON TEXAS AS OTHER BIG BOXES ADVANCE WITH GUNS Sports Authority, which in its glory days subsumed East End-based Oshman’s Sporting Goods, is now preparing to pull out of Texas altogether, writes Maria Halkias of the Dallas Morning News. The company laid off 100 employees in January, and was reported to be looking into Chapter 11 after missing a $21-million interest payment on its $643 million debt. Last week the company’s representatives told workers at a store in Dallas that all 25 of the Texas locations would be shuttered, though they didn’t say when. The closures look to include 11 Houston-area shops, part of 140 Sports Authority locations to be culled nationally; Jeff Kittleson of CBRE retail services in Dallas also told the Morning News that there will be “a garden variety of big box users who will want to reposition stores into these locations.” Indoor sporting goods not-quite-theme-park
Cabela’s is already slated to open up in League City shortly, and Dick’s Sporting Goods signed leases on spaces at Baybrook, Deerbrook, Willowbrook, First Colony, and The Woodlands malls last year. [Dallas Morning News, HBJ] Photo of Sports Authority at 2131 Post Oak Blvd.: Gil G.
32 OF 77 HOUSTON AREA RADIO SHACKS ARE ON THE CLOSURE LIST ALREADY Will that Radio Shack near you be closing, now that the electronics chain has declared bankruptcy? Probably. Of its 4,000 U.S. stores, up to 1,750 appear to be slated to become locations for mobile phone company Sprint. Separately, Radio Shack released on its website a list of 1,784 “potential store closures” — without noting explicitly if the identified locations, listed in 3 separate tranches, were headed for rebranding or outright shuttering. 32 of those stores are in the Houston area. [Quartz; list] Photo of Radio Shack at 4367 Kingwood Dr. (not on the closure list): Ms. Ruby O
COMMENT OF THE DAY: POLLUTION CREDITORS “It’s good to see that the Feds will help clean up the CES Environmental Services site. I’m of the opinion that bankruptcy law should be revised to require that environmental clean-up be paid for before creditors can be paid. It would help in cases like this, but it would also make lenders push dirty industries to clean up their act. Companies with bad environmental records would feel it in their ability to get credit.” [ZAW, commenting on Predicting Houston Real Estate Hotspots; Drinking Water from Lake Conroe] Illustration: Lulu
Back in January of this year, the bankruptcy trustee assigned to colorful imploded homebuilder Royce Homes obtained a $9.3 settlement from Amegy Bank for the bank’s role in what attorneys called a $39 million conspiracy — to swindle creditors by draining the collapsed builder’s bank accounts shortly before Royce shut down and was declared bankrupt, in 2008. A separate settlement with Royce Builders’ founder, Michael Manners, was reached in March. And earlier this month, a jury in federal court returned a $27 million verdict against Royce’s former CEO, John Speer, for his role in the escapade. (Back in March, an earlier jury had ended up deadlocked on a number of charges.)
According to reporting by Law360’s Jeremy Heallen, the charges stemmed from what the attorneys claimed amounted to an off-the-books leveraged buyout of Royce Homes. In 2006, Speer bought Manner’s 50 percent stake in the Royce Homes for $33 million, to give himself complete ownership of the homebuilder. Though the funds used to finance the purchase (including a $20 million personal loan from Amegy Bank) were borrowed in Speer’s own name, Speers, Manners, and Amegy came to an understanding that Royce Homes would ultimately be responsible for paying them off, the suit claimed. The purpose of the scheme, according to the claims, was to keep the loans off of Royce Homes’s financial statements, because doing so would have “wiped out most of the homebuilder’s equity and caused lenders to shut down vital credit lines,” Heallen reports.
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Amegy Bank and More
Residents of the Cambridge Court Apartments at 6500 S. Gessner will get to stay until the end of their leases, but after that they’ll need to find new homes. That’s the word from the complex’s neighbor and new owner, Strake Jesuit. The Catholic boys’ high school is also the property’s old owner; the 7.55 acres the apartments sit on is a portion of the land Strake Jesuit lost as a result of a 1971 bankruptcy. Developer Harold Farb built what was then called the Newport Apartments on the site 6 years later.
School officials plan to tear down the complex “at the earliest possible date” and use the land, which sits just north of the school’s Gessner driveway, for parking and athletic fields. The acquisition will also allow planners to “re-examine where it will construct its new Science and Engineering Building on the campus without a net loss of parking or green space,” the school announced.
Photos: Strake Jesuit (aerial), Apartments.com (Cambridge Court Apartments)
CAMERA STORES CRYING WOLF Didn’t the country’s biggest retail camera chain already declare bankruptcy and close a bunch of its Wolf Camera and Ritz Camera stores in Houston? Yeah, but that was back in 2009; now the successor company is going down that path again, a couple years after bouncing out of bankruptcy protection. In a news release, the company’s restructuring officer makes it all sound like part of a pretty picture: “To achieve our strategic vision of a super-store chain offering unique value-added services . . . it became necessary to implement this vision through a Chapter 11 filing.” Ritz Camera & Image, which has its headquarters in Maryland, is “evaluating which of its 265 stores to close, including at least three stores in the Houston area.” [Houston Business Journal; previously on Swamplot]] Photo of Rice Village store: Wolf Camera
The new owners of the Bennigan’s restaurant chain are hoping to get as many as 10 new Bennigan’s franchises opened in Houston, and they’ve hired a broker to scout for sites. All 20 Bennigan’s in Houston (as well as 6 Steak and Ale restaurants) closed in 2008, after their parent company filed for Chapter 7 bankruptcy. Bennigan’s Franchising Co. is also searching for as many as 10 locations in its Dallas-Fort Worth home base and 5 each in San Antonio and Austin, as well as single locations in other Texas cities. New restaurants will likely look something like the new 4,200-sq.-ft. prototype the company built last fall in Appleton, Wisconsin (above), but don’t necessarily have to be stand-alone buildings, says Daniel Harris of Henry S. Miller Brokerage. Also in development: a fast-casual “Bennigan’s On the Fly” for airports and colleges.
Photo: Real Points
DIGGING OUT FROM HEAVEN ON EARTH Updated task list for the investor group that bought the dilapidated and long-vacant Heaven on Earth Plaza Hotel at 801 St. Joseph Pkwy. at Travis St. Downtown 3 years ago: 1) Pay off $4.2 million mortgage on property; 2) work way out of bankruptcy (declared just last week, to avoid foreclosure); 3) close on $22 million construction loan to redevelop the 31-story former Holiday Inn (and later Days Inn) into an “as economy class as possible” hotel. Meanwhile, New Era Hospitality — the group that bought the property in 2008 from a fund connected to the Maharishi Mahesh Yogi — recently spent around $30,000 to secure the building, after receiving a stream of municipal citations for “dangerous building parts, visual blight, unsecured entrances, and signs of urine and bodily fluids.” The project’s general contractor tells Purva Patel that plans to turn the gutted property into an “upscale” hotel have been scaled back. [Houston Chronicle; previously on Swamplot] Photo: arch-ive.org
YOUR FEEDBACK WAS IMPORTANT TO US The Borders “nothing held back” liquidation sale has brought out a slew of not-so-well wishers to the Galleria store, Jef Rouner finds: “The clerks told us that a pretty significant amount of customers had come in to gloat about the liquidation prices, scold the clerks for bad business practices, harp about how Borders got just what was coming to it, and finally, openly mock the soon to be un-employees.” [Art Attack; previously on Swamplot] Photo: Flickr user e_walk [license]