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Restaurateur Files for Personal Bankruptcy, Keeps Restaurants Separate

hotblack from morguefile.comA New York City restaurateur recently filed a personal Chapter 7 bankruptcy petition, citing overexpansion of his restaurant business in a bad economy. In re Denton, No. 13-bk-12799, vol. petition (Bankr. S.D.N.Y., Aug. 27, 2013). The petition identifies over $1 million in debt and few assets. His three restaurants are currently not part of the bankruptcy case, as they are reportedly held by one or more limited liability companies (LLCs) of which he may not be the sole owner. The bankruptcy proceeding may affect his ownership interest in the restaurants, but should not affect the operation of the restaurants themselves. In most personal bankruptcy cases, the trustee has authority over a debtor’s shares or other ownership interests in a business, but may not have authority over the business itself. This can help keep one owner’s personal bankruptcy from having too much of an adverse effect on a business.

Jason Denton reportedly operates three restaurants in Manhattan, ‘Inoteca Cucina, Catina Corsino Italina, and Indie Food and Wine. He closed at least two other New York City restaurants in the past year. He is a partial owner of the company that reportedly owns the three remaining restaurants, as well as an events company that he manages. His ownership interests in these companies — not the restaurants themselves — are assets in the bankruptcy case.

In his Chapter 7 bankruptcy petition, the debtor identifies about $29,500 in assets and more than $1.37 million in debt. Id. at 4. His debts include credit card and other personal debts, as well as debts directly related to the operation of restaurants that are no longer in business. He identifies more than $100,000 in debt to multiple creditors, for example, from personal guaranties of trade debt or leases for the restaurants Bar Milano, Betto, and Ina. Id. at 14-19. Other business-related personal guaranties and personal income tax debt make up a large portion of the remainder of the debt claimed in the petition.

The debtor identifies four LLCs and one corporation in which he serves or has served in a management capacity, or in which he owns or has owned at least five percent of the equity, during the past six years. Id. at 31. Of the five companies, only three LLCs are still in operation. The debtor identifies one of them as “a company formed to operate ‘Inoteca,” id., and which may also operate the other two active restaurants. The other two LLCs were reportedly formed “to operate various restaurants” and “to plan and cater events.” Id. The debtor claims to own 29.53% of the equity in the company that operates ‘Inoteca, 5% of the event planning company, and 100% of the other restaurant company. Id. at 8. He does not state the values of his ownership interests.

Devin Sawdayi, a bankruptcy attorney, has represented clients in Los Angeles with dignity and respect since 1997, helping them to rebuild their finances and their lives. Bankruptcy protection may offer relief to people whose income is not enough to keep up with their debts, allowing them to restructure their bills or, in some cases, discharge debts entirely. To schedule a free and confidential consultation, contact us today online or at (310) 475-9399.

Web Resources:

In re Denton (PACER registration required), No. 13-bk-12799, U.S. Bankruptcy Court, Southern District of New York

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Photo credit: hotblack from morguefile.com.