Law360, New York (August 31, 2011) — Tavern on the Green LP will auction off the lucrative trademark on the iconic Central Park restaurant’s name for use outside the New York City area on Sept. 21, its trustee told a New York bankruptcy judge Wednesday.
Tavern on the Green’s Chapter 7 trustee, Jil Mazer-Marino of Meyer, Suozzi, English, & Klein, P.C., told U.S. Bankruptcy Judge Allan Gropper that the bankrupt restaurant had received two proposals for the stalking horse bid and chose a $1.3 million bid by a group known as Tavern International LLC.
The auction, which Judge Gropper scheduled for Sept. 21, will include a $65,000 breakup fee for the stalking horse bidder and minimum bid increments of $100,000, said Mazer-Marino, who said the sale has been generating buzz.
“We’re continuing to receive interest,” she said.
The auction comes after Tavern on the Green’s bankruptcy estate ended a contentious battle against the city with an agreement in April over the lucrative trademark, which was once valued at up to $19 million.
The deal allows New York to use the Tavern on the Green trademark for restaurants within the city while the trustee can sell the rights to use the name outside the greater New York area, as long as the buyer adds a geographical modifier, such as ‘Tavern on the Green — Las Vegas.’ A similar arrangement in the agreement governs the use of the name on souvenirs and other merchandise, according to court documents.
Proceeds from the sale of the use agreement will be used to pay TD Bank NA’s secured claims, with the 75 percent of the remaining proceeds to go to the estate and 25 percent to the city, court documents said.
TD Bank held about $3 million in secured claims when the bankruptcy proceedings were converted to a Chapter 7 last year, according to the bank’s attorney, Edward J. Estrada of Reed Smith LLP said in April.
The agreement also settles contentious litigation between the city and the restaurant over who owns the trademark, which the bankruptcy estate has repeatedly said is its most valuable asset, ending what could have been an expensive and uncertain appeal, according to court documents.
On the same day that the case was converted to a Chapter 7 bankruptcy, U.S. District Judge Miriam Goldman Cedarbaum sided with the city over rights to the trade name, saying that in 1934, New York City’s then-Parks Department Commissioner Robert Moses created the name as part of his plan to convert a sheep pasture into a restaurant.
The city has held significant interest in the iconic eatery since then, paying for renovations and finding licensed operators over the years, Judge Cedarbaum said.
The restaurant filed for Chapter 11 bankruptcy in September 2009, estimating total assets and liabilities at $10 million to $50 million each. At the time, company CEO Jennifer Oz LeRoy blamed the filing on the recession and the city’s decision not to renew the long-running lease.