Trustee moves court to unload Aspen Kitchen’s assets, lease
The trustee handling the Chapter 11 bankruptcy of Aspen Kitchen and the Rec Room has moved a bankruptcy court to sell their assets and assign their leases on the Galena Street location.
Chapter 11 Trustee Michael L. Staheli filed a motion Friday seeking the bankruptcy court’s authorization. Selling the assets and assigning the leases to a bidder “is in the best interest of the debtor, its estate and its creditors,” the motion said, noting packaging the lease and assets together will make them more marketable.
“Without the restaurant lease and the lounge lease, the debtor’s operating assets have nominal value at best,” the motion said.
Staheli has picked Aristone Hospitality as the so-called stalking horse bidder, pending approval from the U.S. Bankruptcy Court in Denver.
Aristone is controlled by Patrick McGrath, who was fired from parent company Rocky Aspen LLC as co-manager in January. In an affidavit, McGrath said both the restaurant and nightclub were “highly successful” and were “not insolvent or in need of bankruptcy protection.” McGrath said Rocky Aspen filed the bankruptcy to wrest full control of the business from AH DB Kitchen Aspen Investors and lender Hanford Holdings.
A stalking horse offer, made before an auction, is meant to prevent lowball bids from prevailing and hurting the debtor.
Luke McGrath, Aristone’s attorney in New York, and developer Mark Hunt, who owns the building the Aspen Kitchen and Rec Room once occupied, did not return messages Monday.
Staheli, a court-appointed trustee who has control of the finances and other aspects of Aspen Kitchen and Rec Room, shut down the two businesses Sept. 15. Rocky Aspen LLC declared bankruptcy in March after the fine-dining restaurant and retro lounge opened in December. Scores of employees, except for the business’s Aspen accountant, were fired.
Last week’s motion said the businesses were closed because they were losing money and couldn’t cover such expenses as payroll and the combined monthly rent of $84,099. Additionally, Matt O’Neill, the restaurant’s director of kitchen operations, quit in mid-August; general manager Alexander Loehwing was transferred to another restaurant in the company in early September; and the head chef resigned last month, the motion said.
The bankruptcy was a culmination of billing disputes with contractors, vendors and Hunt, as well as ownership disputes among parties and lenders.
Multiple lawsuits are pending in both Piktin County District Court and Denver federal court, including one pitting Rocky Aspen against California-based lender Hanford Holdings, which is accused of pushing Rocky Aspen into bankruptcy by demanding that a $3.5 million loan be paid in full, according to court records.
Aristone Hospitality LLC, the New York group chosen by Staheli to place the stalking horse bid, also has been part of the litigation. Aristone is the majority member of AH DB Kitchen Aspen Investors, which invested in Rocky Aspen. Aristone also is controlled by McGrath.
While Aristone’s involvement awaits court approval, the proposal also could be derailed if Rocky Aspen decides to assume the leases on the property, located at 204 S. Galena St. Rocky Aspen has until Oct. 10 to assume or reject the leases, according to court documents.
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