Wednesday, September 2, 2015

Union Trust seems to be finished

The Chestnut Street steakhouse has a Jan. 8 court date.

Union Trust seems to be finished

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Union Trust steak house.  ED HILLE / Staff Photographer
Union Trust steak house. ED HILLE / Staff Photographer

The news hasn't been positive lately for those associated with Union Trust steakhouse (717 Chestnut St.), which closed abruptly before Thanksgiving.

Today, an attorney for the company filed a motion with U.S. Bankruptcy Court to dismiss its request to borrow money. Unless someone comes up with hundreds of thousands of dollars, this move in effect will set the stage for a Jan. 8 hearing that could convert the bankruptcy from Chapter 11 (a reorganization) to Chapter 7 (liquidation).

A Chapter 7 could portend some even more serious legal outcomes.

Union Trust opened in 2009 amid a go-go period for new steakhouses. On an unpopular side of town for high-end dining, it operated in bankruptcy for two of its four years. Court records say UT owes $225,000 in back taxes to the Commonwealth of Pennsylvania, which has created a Catch-22 (the restaurant's liquor license is inactive now, and as such, it can't generate revenue without one).

Foobooz reported last week that employees are owed back pay.

As I reported last month, court documents say the building is historically certified with the U.S. Department of Interior. Union Trust operator Joe Grasso's acquisition of the building came with certain, unspecified tax benefits that helped the seller, Sherwin Williams Co. (now a creditor of Grasso's). One of the conditions for the preservation of the historic-tax credit is that the building's "use as a restaurant remain for five years from its inception," Grasso's filing says. If the restaurant discontinues operation, the filing says, Sherwin Williams would lose the tax credits.

At that point, the IRS could go after Sherwin Williams, which in turn could go after Grasso - who filed for personal bankruptcy last year.

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