Aspen Kitchen returns from the ashes, but still owes money
Aspen Kitchen reopened its doors Thursday following a nine-month bankruptcy organization, but one person who didn’t dine there was Doug Lassiter.
“They stiffed us,” the owner of Lassiter Electric in Basalt said Wednesday.
Lassiter’s business is among a slew of local employers who say they were left hanging by the bankruptcy of Rocky Aspen, a group of Aspen Kitchen investors that declared Chapter 11 in March.
Multiple businesses owed money by Aspen Kitchen didn’t return phone calls last week, while some of their managers and owners would not comment for this story because they were holding out hope they still might get paid.
Lassiter isn’t one of them. He’s given up on recouping the $113,170 sum Aspen Kitchen’s bankruptcy petition says is owed to his company.
“These cats from New York, they’ve got so much political power and spend all of their resources to not pay us,” he said. “That’s the battle we’re in. They’ll full of power and we’re a small group.”
The trend continues
The story of Aspen Kitchen mirrors a number of flashy restaurants that pour into Aspen’s dining arena with high hopes and leave with disappointing results.
Ruth’s Chris Steak House signed a 10-year lease at the old Guido’s space, which now houses Casa Tua, in September 2006. The franchisee that opened the restaurant in early 2007 struggled, however, losing $1 million in 2007 and some $700,000 in 2008, based on testimony from an Aspen trial against its landlord. It closed in October 2009.
Nello Alpine Aspen, which opened at the Residences at the Little Nell complex in December 2015, continued the crash-and-burn trend, accumulating more than $300,000 in liens around the time it went out of business in June.
One way Aspen Kitchen is different from those restaurants, and other failed ones, however, is it didn’t close for good.
The high-end restaurant and its sister lounge, the Rec Room, were shut down Sept. 15 by a court-appointed bankruptcy trustee who took control of their finances.
But three months later Aspen Kitchen was cooking again, with promotional material saying that Chef Matt O’Neil, who quit in August, was back at the helm, whipping up “favorites like dry-aged saltbrick beef, fire-roasted cauliflower, roasted suckling pig, harissa-braised lamb” and “a host of new dishes.” The Rec Room, however, is no longer, with Rickhouse Lounge poised to take its place underground later this month.
Debts pile up
A business bouncing back from Chapter 11 bankruptcy is hardly a novel event. The intent of Chapter 11 is to allow an individual or business to reorganize their debts through a court-approved plan with their creditors. Some businesses keep operating through bankruptcy, while others fold.
Part of Aspen Kitchen and the Rec Room’s problems were they weren’t making money; in fact, they were losing it while defaulting on loans.
For at least the first five-and-a-half months of business, the two operated at a combined loss of $719,403 from mid-December 2015 through May, their lawyers said in court documents.
And like many bankruptcy cases, this one was rife with complexities, and was further compounded by court fights with celebrity chef David Burke.
Rocky Aspen declared Chapter 11 on March 11, and on April 27 a Denver bankruptcy judge approved its request to borrow $600,000 from New York-based Craveable Hospitality Group, which had been known as David Burke Group until July 13. Burke is not associated with Craveable and hasn’t been affiliated with Aspen Kitchen for at least one year.
Through Oct. 31, Rocky Aspen owed $529,099 in principal and $13,566.47 of accrued interest to Craveable, setting up a bankruptcy court-approved agreement that allowed Craveable to take over the restaurant.
According to a purchase agreement that is part of the Dec. 1 bankruptcy settlement, Craveable paid $864,207 to Rocky Aspen for all of its restaurant assets. Craveable also agreed to waive the $568,622 Rocky Aspen owed it as of Nov. 11, and agreed to pay outstanding taxes of $1,200 to Pitkin County and $7,000 in utility balances to the city of Aspen.
The stipulation also said “as conditional consideration,” debts to landlord Mark Hunt, who charges combined monthly rent of $84,099 for the dining and tavern space, and debts associated with mechanics’ liens placed on the property would be resolved.
Those liens were related to the construction work done on Galena Street as part of Hunt’s demolition of the old Gap building and replacing it with the new one in 2014.
“It has been settled as part of the court agreement,” said a receptionist at creditor Stone Concepts in Eagle, on behalf of project manager Pete Carlson, who declined to be interviewed for this story.
At the time of Rocky Aspen’s bankruptcy filing, Carlson said the company didn’t talk to the media about debts it is owed, “but my ownership has been fed up,” he told The Aspen Times.
Basalt-based Summit Construction made repeated efforts to get paid. Summit was the general contractor on the development of the Aspen Kitchen and Rec Room nightclub. It filed a mechanic’s lien on the property earlier this year, and also tried to get paid through the bankruptcy case. When those efforts didn’t work, Summit sued Rocky Aspen for $255,384 in July in Pitkin County District Court. The case was dropped after the bankruptcy settlement, court records show. Summit did not respond to requests seeking comment.
Same as the old owner?
Opponents of the agreement claim the ownership change is simply a shell game. It was Craveable that previously ran the restaurant, though Rocky Aspen was the owner only in name, they say.
California-based creditor Hanford Holdings has argued throughout the bankruptcy proceedings that it was actually the majority owner of Aspen Kitchen, counter to Rocky Aspen’s contention that it was.
Hanford, which Rocky Aspen claims pushed it into bankruptcy after it demanded that Rocky Aspen honor its more than $3 million loan in full in February, is appealing the bankruptcy settlement.
None of that court squabbling matters to Lassiter. He said he and his employees worked hard on the project but have nothing to show for it.
“It’s hell on wheels here, but I still gave my guys a Christmas bonus this year, and I worked 80 hours a week,” he said.
He also expressed resentment toward those who will patronize the reopened Aspen Kitchen.
“It’s kind of a shame that the local people will support a business that’s not paying the local people,” he said. “It just shows we’re not the local community we used to be there.”
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Aspen City Council is considering yet again to ask voters whether to repurpose Wheeler real estate transfer tax for another community use. The idea has been discussed dozens of times over the years by various councils.