Bohager's bar petitions for Chapter 11 protection Lease problems, expansion blamed

November 17, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Bohager's Bar and Grill filed for bankruptcy court protection from creditors yesterday, citing a cash-flow crunch caused by a dispute between partners James Mikula and Damian Bohager and the bar's landlords -- who are Mr. Bohager's brothers.

The nightspot has been controversial since its 1992 opening with neighbors to the east, who complain that the South Eden Street bar's patrons are often rowdy -- ex-Washington Bullets forward Don MacLean missed 21 games last season after breaking his thumb in a fight outside of Bohager's on New Year's Eve -- and sometimes younger than the legal drinking age.

But the neighbors are not the issue, Mr. Bohager said yesterday.

"We needed to work with the landlord, and the landlord wasn't interested," Mr. Bohager said.

The landlord is a corporation run by Bernard and Robert Bohager, who took over management of the building after their father died, Damian Bohager said.

Robert Bohager declined to comment on the dispute.

Two business moves teamed up to force the Chapter 11 filing, which indicates that the owners plan to restructure their debts and stay in business.

First, the partners spent $300,000 -- about half of it borrowed -- to build a crab deck and crab kitchen this year in a bid to lure an older, dining-oriented crowd, Damian Bohager said. Second, the business agreed in May to a lease amendment that Damian Bohager said increased the rent about 45 percent -- but only until April.

"Everyone's perception is that you're making money hand over fist," said Damian Bohager, secretary of the corporation that owns the bar, which reported $609,265 in assets and $546,811 in liabilities in its bankruptcy filing. "But we've put everything back into the business."

The combination of the higher rent and the new loan payments squeezed the bar's cash flow throughout the summer, Damian Bohager said.

The event that forced the filing was the October due date of a balloon payment of percentage rent, a payment to the landlord based on sales by the business that is in addition to the usual monthly rent.

"We're not in a position to pay that," Damian Bohager said. "We need a payment plan."

Damian Bohager said the expansion loan, which the partners personally guaranteed, is current. He said the company plans to pay lenders and trade creditors 100 cents on the dollar.

Bankruptcy law allows debtors to repudiate leases, but Damian Bohager would not say whether the partners plan to take such a confrontational tactic in negotiating with his brothers.

He said the bar-restaurant's sales are actually up about 5 percent this year. It has become a favorite of 20-something suburbanites attracted to its ambience and its location near Interstate 83, in a formerly industrial area between Little Italy and Fells Point that is otherwise mostly locked in a lingering stagnation between decline and renewal.

"It's a successful business -- you hate to get the black eye" that accompanies filing for bankruptcy, Damian Bohager said. "We're busy even during the week."

Bohager's has become a flash point in a battle between neighborhood associations and developers of large-scale entertainment venues proliferating in the city's Fells Point and Canton sections.

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