New York Restaurant and Celebrity Hot Spot Files for Bankruptcy
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New York Restaurant and Celebrity Hot Spot Files for Bankruptcy

August 10, 2012


New York’s trendy Italian restaurant Barolo filed for bankruptcy help this week in order to prevent its landlord from evicting it, according to a recent report from New York Crain’s Business.

The restaurant, which has operated in the heart of Manhattan for a quarter of a century, filed for bankruptcy in Manhattan’s U.S. Bankruptcy Court in an effort to begin shedding its debts.

The restaurant has been struggling financially for years, and the recent recession played a prominent role in its recent money crisis. Since 2004, thanks to declining real estate values in its neighborhood, the restaurant has paid a reduced rent, but this sum is still $110,000 a month, which is quite an obligation for even the most successful eateries.

In 2010, Barolo fell behind on its rental payments, and the landlord made several unsuccessful demands to receive the unpaid rent. Since then, the landlord has been trying to evict the tenant.

Despite its rent troubles, however, Barolo claims in its bankruptcy petition that it is still profitable, and that it continues to provide work for nearly 100 employees.

The lease for the restaurant runs through March 2018, and its bankruptcy petition observes that the eatery has a “great reputation for good food and it was built to last the entire 30 years of its original lease.”

In other words, the restaurant believes that it is doing just fine, and would like to remain in its current location for the duration of its original lease agreement. The landlord, however, has other plans, and sources believe that a new restaurant is expected to move into Barolo’s location later this year.

The owner of Barolo confirmed this speculation by telling reporters that potential new tenants have indeed been visiting the restaurant. Remarkably, the 400-seat restaurant, which has long been a favored hangout spot for celebrities in Manhattan, has more than $10 million in debt, a significant portion of which is owed to its landlord.

But the restaurant hopes that a portion of this debt may be forgiven in bankruptcy court. Of course, even if the debt is forgiven, it looks like Barolo will be serving its food in another location by the end of the year.

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