Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on April 28 approved an agreement between the debtor and New York City that clears the sale, court papers said.
Chapter 7 trustee Jil Mazer-Marino had sought approval of the settlement on April 15.
Through the agreement, the buyer of the Tavern on the Green name would have to locate its restaurant outside of New York, New Jersey, Connecticut and certain parts of Pennsylvania. The buyer would also have to attach the location to the name, such as Tavern on the Green – Las Vegas. The restaurant would also have to comply with certain quality-control requirements, court documents said.
The city would be able to use the Tavern on the Green name within New York City.
The buyer could use the Tavern on the Green name on products, such as salad dressings, oils and other food items, as well as home furnishings, apparel and accessories, for sale outside of the city, but products sold inside of New York City and certain counties in New York and New Jersey could only be sold with the city’s consent and would be subject to royalty payments, court papers said.
The dispute between the city and the estate was resolved after more than a year of face-to-face meetings, conference calls and myriad drafts of documents.
The debtor’s estate will use the proceeds of the sale to repay secured creditor TD Bank NA, owed $2.4 million, with any remaining proceeds to be split between the estate and the city, with 75% for the former and 25% for the latter.
Mazer-Marino has tapped Streambank LLC to sell the debtor’s intellectual property, and Streambank has already begun to market the assets. The sale will be conducted through a bankruptcy court-approved sale process, a statement from Streambank said.
‘Jil Mazer-Marino has done a terrific job for the bankruptcy estates,’ Streambank principal Gabriel Fried said in the statement. ‘The settlement reached with the city reflects the best possible outcome that was achievable without engaging in expensive and risky continued litigation.’
Buyers have to offer a minimum of $500,000 for the trademark. No bid deadline has been set to date for the sale, Fried said Monday, May 2.
Streambank is looking for a stalking-horse bidder for the sale and is confident that it will be able to secure one before the auction, which is tentatively scheduled for mid- to late July, he said.
He added that the sale has already received a lot of interest from potential buyers with varied ideas about the best way to use the trademark, with some interested in a restaurant in a certain geographic location and others interested in specific product lines.
On March 9, 2010, Judge Miriam Goldman Cedarbaum of the U.S. District Court for the Southern District of New York in Manhattan ruled in favor of the city in its dispute with the debtor, asserting the city had established the restaurant more than 35 years before the debtor’s use and registration of the Tavern on the Green name. She also found the trademark was obtained fraudulently by the debtor.
The former restaurant, however, appealed the decision on May 5, 2010, to the U.S. Court of Appeals for the 2nd Circuit.
Court documents said that without approval of the settlement, the estate would have no option but to litigate the appeal. Even if the estate were successful, the process could result in a lengthy and expensive trial.
‘Also, as time passes, the trademark’s association with a fine dining experience could become attenuated, adversely affecting the value of the trademark,’ court documents said.
The appeal will be withdrawn through the settlement.
Tavern on the Green closed on Dec. 31, 2009, then auctioned off its chandeliers, artwork, murals, kitchen equipment and other items in the restaurant. The items, however, sold for less than one-quarter of their $8 million appraised value at the three-day auction in January 2010, court papers said.
Tavern on the Green and affiliate LeRoy Adventures Inc. filed for Chapter 11 on Sept. 9, 2009, after the city’s Department of Parks & Recreation did not renew its lease.
Restaurateur Dean Poll, who operates the Loeb Boathouse eatery in Central Park, was instead awarded the 20-year lease. Poll was chosen after he submitted the highest proposal for the lease, but talks between Poll and the union representing the Tavern’s former workers broke down last year.
Tavern on the Green also blamed its bankruptcy filing on ‘extreme financial distress brought on by the current financial crisis,’ a company statement about the bankruptcy filing said.
The case was converted to a Chapter 7 proceeding on March 10, 2010.
Mazer-Marino and her counsel, Alan Marder at Meyer, Suozzi, English & Klein PC, could not be reached for comment.