Charles St. restaurant files for bankruptcy

September 14, 1990|By Meredith Schlow | Meredith Schlow,Evening Sun Staff

The Bistro restaurant has filed for bankruptcy as a result of a dispute with its landlord, the management company that runs Brown's Arcade, a retail complex on Charles Street.

The Bistro's owner, Yermar Inc., filed Tuesday for protection from creditors under Chapter 11 of the federal bankruptcy code, listing assets of about $18,000 and liabilities of about $20,000.

Jose Antonio Fernandez, owner of the company, said that Brown's Arcade (Phase One) Joint Venture had notified him of its intent to terminate The Bistro's lease and evict him from the premises by the end of the month.

Brown's Arcade (Phase One) Joint Venture is a partnership between the Enterprise Development Co. and Struever Brothers, Eccles and Rouse Inc. Enterprise has managed the complex for about 1 1/2 years.

According to court papers, Brown's Arcade maintains that the restaurant's 10-year lease calls for an annual increase in rent. Such a policy is not uncommon. Brown's Arcade claims that Fernandez owes it nearly $16,000 in back rent because he has refused for more than a year to pay rent at the higher rate. Instead he has paid a monthly rent of $2,500 plus miscellaneous expenses.

Fernandez said he never agreed to pay the increase. The lease, he said, was signed by William Yerkes, a partner who left the restaurant before it ever opened. Fernandez joined Yerkes, and his company, Yermar Inc., a month after the lease was signed. When Yerkes departed, Fernandez and a third partner, Jean-Michel Lacaze, decided to open the restaurant together. Fernandez later bought out Lacaze.

Before The Bistro opened in the spring of 1988, Fernandez said he made a verbal agreement with Carolyn Gilbert, who was then general manager of Brown's Arcade. He said she told him to proceed with the opening and that he would not have to pay the annual increase.

When Brown's Arcade changed management, Fernandez said he told the new general manager, Barbara Knode, that he remained unwilling to pay the annual increase and asked for a revised lease.

He said Knode made a verbal agreement but never put it in writing.

Knode denies she made an agreement with Fernandez. She declined further comment about the lease on the advice of the management company's lawyers.

"As a company policy, we are always interested in working with our tenants and improving sales and making their businesses as profitable as possible," she said.

Fernandez's lawyer, Ransom J. Davis, a partner in the Baltimore law firm of Whiteford, Taylor & Preston, said that attempts to negotiate with Brown's Arcade have been futile. The bankruptcy filing, he said, stays all proceedings in any other court, though he said he is sure Brown's Arcade will appeal to the bankruptcy court for relief.

"I'm sure they'll continue their efforts to evict him," he said.

Peter A. Woolsen, an attorney with Frank, Bernstein, Conaway & Goldman who is representing Brown's Arcade, declined to comment.

The restaurant has been involved in disputes with its landlord from the outset, according to Fernandez. In a letter dated Feb. 2, 1988, the previous management company agreed to install an entrance on Charles Street. After construction was completed, Fernandez said he was told to pay for the work himself if he wanted to open the restaurant. After investing time, energy and money in redecorating, Fernandez said, he did not want to risk losing the opportunity to open The Bistro. He paid the $2,500 bill himself, he said.

Fernandez said there is a leak in his kitchen that he has tried to get Brown's Arcade to repair for more than two years. He said he has previously had to withhold rent from the management company in an effort to get a variety of repairs completed and that he paid for much of the restaurant's remodeling in the dining area and the kitchen.

"I had to throw away 99 percent of the [equipment]. It was too old."

A restaurateur for 25 years, Fernandez said he has owned several businesses in his native Spain, in Switzerland and most recently in the Georgetown area in Washington. He has never filed for bankruptcy before.

"I love to work," he said. "Be good and give to make it. That is life."

Davis, a frequent patron of The Bistro, describes his client as a "very charming gentleman."

"He runs a very nice restaurant," Davis said. "I believe that he has worked very hard ... and has committed a lot of money to the effort. He stands to lose not just all of the money he's put in, but two years of hard work as well."

However, Fernandez is determined to reorganize and keep his restaurant running.

"I hope we can sit down and make a new lease," he said. "I can prove to them [Brown's Arcade] that I can make it work. They need to have confidence in me."

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