Aspen businessman DeGraff files for bankruptcy protection
ASPEN – Saddled with millions of dollars in debts, Aspen businessman Scott DeGraff has sought bankruptcy protection, court documents show. DeGraff filed a voluntary Chapter 11 petition Sept. 30 in the U.S. Bankruptcy Court in Denver, listing both his assets and debts between $10 million and $50 million. Chapter 11 allows an individual or business to reorganize debts under the bankruptcy court’s supervision. DeGraff filed the bankruptcy as an individual, though the petition says his debts are “primarily business”-related. The bankruptcy sits against a backdrop of business setbacks DeGraff endured since he tapped the local eatery and bar market in 2008 after moving here from Las Vegas, where he had co-founded the N9NE Group – a restaurant and nightclub chain.In December 2008, he opened Junk and Liquid Sky at Base Village in Snowmass, shutting them down at the end of the ski season. A lease he signed in May 2009 to reopen the Red Onion in Aspen was terminated before the historic tavern did a day of business. A slew of liens and lawsuits also have been filed against DeGraff and one of his corporate entities, Fun Worldwide, for alleged nonpayment of bills related to construction work and other services. And two weeks ago, Aspen firm Bill Poss Architecture & Planning, following a bench trial in Pitkin County District Court, won a court judgment of $117,136 for the interior design work it did at the Red Onion in 2009, according to a Sept. 22 article in the Aspen Daily News. The extent of DeGraff’s debts, however, was unclear as of Wednesday.His bankruptcy petition does not provide any statements of his financial affairs or his source of income, an omission not lost on the bankruptcy court, which filed a notice of deficiency Monday. The notice says that the case will be dismissed if DeGraff does not meet the court’s requirements to report various aspects of his financial standing, including a list of secured creditors. DeGraff could not be reached at his wife’s Aspen restaurant, Junk, on Wednesday. His bankruptcy attorney is Lee Kutner from the Denver firm Kutner Miller Brinen PC, who did not return a telephone message seeking comment.The petition does, however, list DeGraff’s creditors holding the 20 largest unsecured claims, which typically receive the lowest priority in a bankruptcy case. More than $7.5 million is listed in unsecured claims. The biggest is $4.2 million to D&R’s Retirement Plan LLC, controlled by four principals with whom DeGraff once did business. D&R’s had lent DeGraff $3 million to open the Junk and Liquid Sky establishments in Snowmass. After DeGraff failed to make good on the note, the New York-based D&R’s sued him. In October 2010 a federal judge ruled in the favor of D&R’s, ordering DeGraff to pay it more than $4 million. Other unsecured claims include $118,020 to Porsche Leasing in Cincinnati and more than $100,000 to various credit card companies. Several law firms are listed as holders of unsecured claims, including the Aspen practice Allen, Wertz & Feldman LLP, which DeGraff owes $30,000.Name partners Jeff Wertz and Alan Feldman, who represented DeGraff in last month’s trial, did not return phone messages seeking comment Wednesday. Kutner Miller Brinen PC, the law firm representing DeGraff in the bankruptcy, has received $36,431 to handle the case, according to a Monday filing in the case.An application to employ the firm, which is filed with the bankruptcy case, notes that DeGraff is “an individual who resides in Aspen, Colorado. [DeGraff] has a number of business interests that center on the restaurant and entertainment industries.” A meeting of creditors is scheduled for Nov. 7 in Denver’s bankruptcy court. email@example.com
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