U.S. Government Moves to Liquidate Union Trust
Joe said to tell you that we plan to open in a few days. That’s what Joe Grasso’s assistant told me in mid-November, when I called Grasso to find out why his $12 million steakhouse Union Trust had closed. But here it is a few weeks later, and the situation has gone from bad to worse.
Union Trust has been in Chapter 11 bankruptcy proceedings since early 2011. Chapter 11 is designed to allow a business the chance to reorganize and get a second shot at success. But recently, the United States government made a motion to dismiss the Union Trust bankruptcy case altogether, which would remove the protections offered by Chapter 11, or to convert it to Chapter 7, which would force the business to be liquidated to pay off as much of its debts as possible.
One bankruptcy expert who has analyzed the bankruptcy filings explains that Union Trust has a negative cash flow and hasn’t been paying some of its taxes of late. A hearing on the Chapter 7 motion is scheduled for January.
Meanwhile, employees are left out in the cold. According to Union Trust general manager (I guess make that former general manager) Sarah Christiansen, dozens of workers — from dishwashers to managers, including her — are owed weeks of back pay. “Before we closed, I personally put money into buying product, and I held my paychecks just so my staff could get paid,” she claims, adding that even she’s surprised that Union Trust is still closed. “We were all planning to work that weekend. Business had been good.”
Christiansen says she was told that employees cannot be paid because the “accounts are all frozen”, although the bankruptcy expert I spoke with says that’s not necessarily true. “But these cases can be very confusing,” he cautions.
And any disgruntled employees who think that Grasso should dig into his own deep pockets to cover the payroll shouldn’t hold their breath: Grasso has filed a separate case declaring personal bankruptcy.
Grasso could not immediately be reached for comment.