Liquidation in tavern's future
Peter Christian’s Tavern is set to be liquidated after the shuttered New London restaurant’s owner filed for bankruptcy this week.
Russell McDonough and his two companies, PMF Corp. and TKR LLC, filed for Chapter 7 bankruptcy Monday in U.S. Bankruptcy Court in Manchester.
PMF operated the restaurant, and TKR was responsible for its building at 195 Main St., which also houses a gift store and seven residential apartments.
Unlike Chapter 11 bankruptcy, in which companies can reorganize and continue operating, Chapter 7 provides for the sale of property in order to pay off creditors.
Peter Christian’s Tavern didn’t open Feb. 12 after nearly 35 years in business. McDonough shut it down because he wasn’t able to manage the business after a car crash last December left him with medical problems, according to his attorney, Michelle Kainen.
Over the last two months, Kainen has worked with McDonough’s major creditors to find a way to sell the business to a new owner who would reopen the tavern, seeking to avoid bankruptcy or foreclosure.
The sale was complicated last month when Mascoma Savings Bank, one of the restaurant’s main creditors, went to court to attach a lien to the real estate and other property.
That meant Mascoma would be second in line for any proceeds from a property sale, after the mortgage holder, Claremont Savings Bank. But it also effectively forestalled any possibility of Claremont Savings Bank taking over the property to directly manage a sale, president and CEO Sherwood Moody said at the time.
Kainen wrote in Monday’s bankruptcy filings that she “engaged in significant negotiations with both secured lenders . . . and worked cooperatively with both in the hopes that a bankruptcy could be avoided for the entities entirely. Unfortunately, conflict between the lenders resulted in the need to file” for bankruptcy.
It’s unclear if the bankruptcy means any sale of the tavern is off the table. Kainen yesterday referred that question to the creditors.
Officials from the Claremont and Mascoma banks didn’t return messages yesterday. Nor did Steven Notinger, the interim trustee for the bankruptcies.
The creditors are scheduled to meet May 20 in Manchester, according to court filings.
In general, secured creditors such as the banks have a better chance of recouping some of the money they’re owed. The bankruptcy filings indicate unsecured creditors, such as restaurant vendors, are not expected to see money from a liquidation.
McDonough filed for personal bankruptcy, listing nearly $220,000 in total assets and more than $1.15 million in total liabilities, mostly business-related debts but including some credit card debt and student loans.
TKR’s corporate bankruptcy filing lists nearly $406,000 in assets and about $817,000 in liabilities. PMF listed more than $39,000 in assets and nearly $268,000 in liabilities in its filing.
Among the restaurant’s remaining inventory, PMF listed 2 gallons of Peter Christian’s locally famous mustard, along with 18 large and 13 small jars of the condiment. Thirteen cases of Peter Christian’s Root Beer were also in stock.
The three bankruptcy cases are intertwined and will likely be dealt with together, Kainen said.
Individuals filing for Chapter 7 are allowed to keep some property and make a fresh start free of debt, Kainen said. In his filing, McDonough’s exempt property claims included $300 in clothing, a 1998 Jeep Cherokee, checking accounts totaling about $11,000 and his grandmother’s rings.
He doesn’t intend to remain in his North Sutton home, which would be surrendered to Claremont Savings Bank, Kainen said.
Claremont Savings Bank is now managing the tavern’s Main Street building, Kainen said. Claremont has secured claims totaling nearly $787,000, according to McDonough’s bankruptcy filing.
Ben Leubsdorf can be reached at 369-3307 or .
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