Bankruptcy puts Aspen Kitchen, Rec Room on hold | AspenTimes.com

Bankruptcy puts Aspen Kitchen, Rec Room on hold

File photoAspen Kitchen and its downstairs neighbor the Rec Room closed Thursday as part of bankruptcy proceedings in Denver. A company spokeswoman said they will open by ski season.
C2 Photography/courtesy photo |

The bankrupt Aspen Kitchen and Rec Room nightclub closed their doors Thursday with plans to open by the upcoming ski season, a company spokeswoman said.

The closure marks the latest setback for Rocky Aspen LLC, the group that opened the fine-dining spot and ’70s-style lounge in December before declaring Chapter 11 on March 11 in Denver. Previously, the two businesses, located at 515 E. Hopkins Ave., had operated through the bankruptcy. Nearly 80 employees had worked at the two locations. An employee said staff members weren’t given any notice of the closure, “leaving us all without jobs or ski passes now.”`

In an email to The Aspen Times, spokeswoman Juliana Pesavento said, “Aspen Kitchen will be closed for the remainder of the offseason as efforts to reorganize the business continue.We look forward to serving our guests during this upcoming ski season. Thank you to the community, our guests and partners for the loyalty and support.”

Chapter 11 Trustee Michael Staheli ordered the shutdown, according to Pesavento. He could not be reached for comment.

As of Thursday, there was no documentation in the case to reflect Staheli’s order. U.S. Bankruptcy Trustee Paul Moss, who oversees the administration of the case, declined comment.

Bankruptcy records, however, paint a picture of a struggling business venture.

In June, Moss filed a motion to either dismiss the case, convert it to Chapter 7 (liquidation) or appoint a Chapter 11 trustee to manage the restaurant and cocktail bar’s finances.

The result was the court’s appointment of Staheli on Aug. 2.

Moss’ motion contended that a Chapter 11 reorganization did not appear likely because the businesses had “not shown any consistent trend toward profitability or stability.” The motion noted the restaurant and nightclub had operated at $719,403 in the red since their December openings through May. Additionally, a lingering ownership dispute also plagued the case, his motion noted.

Aspen’s summer tourism months of June and July also did not yield lucrative results for Aspen Kitchen and the Rec Room, court filings show.

The businesses fought to make ends meet with a monthly rent of $84,099 and a staff payroll that commanded $35,714 on July 1, $59,687 on July 8, $48,512 on July 15, $49,754 on July 22 and $47,265 on July 28, according to the business’s monthly operating report for July, which is part of the case file.

That same month, the restaurant and nightclub grossed $475,886 in revenue and was buoyed by a $65,000 loan, giving it total cash receipts of $540,886. But after paying its bills that month, it profited to the tune of just $1,446, court records show.

In June, the two establishments combined to gross $221,434 and were supported by a cash advance of $229,533. They netted $3,722 that month.

Two days after Staheli’s appointment, which made him in charge of the debtors’ finances, he filed an emergency motion seeking a $30,000 loan, with $15,000 each coming from investors Hanford Holdings and AH Kitchen. The trustee filed the motion after another lender, Watershed Ventures, determined the debtor had defaulted on a $600,000, court-approved loan it took out in April. As of Aug. 8, the balance due was $529,099, court records show.

Staheli’s motion noted that Aspen Kitchen and the Rec Room had “insufficient funds to meet its payroll obligation. … Continued funding of the debtor is necessary in order to allow the debtor to fund it operations (including paying its employees) and meet its ongoing obligations. If the debtor is unable to obtain a new source of funding, it will have no ability to continue its operations.”

Despite an on objection to the loan by landlord 204 South Galena Street LLC, which is controlled by developer Mark Hunt, bankruptcy judge Elizabeth E. Brown approved the cash advance Aug. 10, according to court documents.

At the time Rocky Aspen filed Chapter 11, its bankruptcy petition said the Aspen Kitchen and Rec Room had between $1 million and $10 million in debts. Also then, a company official said the goal was to resolve the bankruptcy by the end of this year.

A handful of lawsuits also are pending against Rocky Aspen in the U.S. District Court of Denver and Pitkin County District Court. One of the plaintiffs is Summit Construction of Basalt, which was the contractor on the development of the restaurant and lounge. Summit, which also is a creditor in the bankruptcy case, claims Rocky Aspen owes it $255,384.

Other local creditors include EBC Support ($14,760), Empire Drywall ($15,000), Lassiter Electric ($113,170), Marquez Maintenance ($20,187.50), Specialized Protective Services ($16,905) and Z Group Architects ($33,320).

Aspen Kitchen is part of a collection of restaurants in Chicago, Las Vegas and New York City, as well as in Connecticut and New Jersey, under the management of Craveable Hospitality Group, which had been known as the David Burke Group until July 13.

rcarroll@aspentimes.com


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