The owners of a downtown tiki bar and restaurant declared bankruptcy.
Mark A. Sellers III, former president of BarFly Ventures LLC and current manager of Authentiki LLC, the wholly owned subsidiary for Max’s South Seas Hideaway (MSSH), filed Chapter 11 (subchapter V) bankruptcy for MSSH, 58 Ionia Ave. SW, and Authentiki, each, on Thursday at the U.S. Bankruptcy Court in the Western District of Michigan because of the financial toll that resulted from the COVID-19 shutdown.
The bankruptcy was filed to restructure the debt of MSSH and preserve its value.
Despite receiving a Paycheck Protection Program loan of $505,022, a United States Small Business Administration (SBA) Economic Disaster Injury Loan (EIDL) of $149,900 and reopening in June to a maximum capacity crowd of 50%, Sellers stated in court documents that “the return to profitability will not be swift enough to satisfy other creditors asserting claims against the debtors.”
Authentiki and MSSH creditors are SBA, the landlord and Wolverine Building Group Inc. Sellers stated in court filings that they need to repay EIDL in the principal amount of $149,900 and the SBA may assert claims to all of Authentiki’s assets, including its cash collateral.
Per court documents, the landlord can assert a first priority asset lien against all of MSSH’s personal property, including inventory at the restaurant and secure MSSH’s rent obligation including, without limitation, approximately $76,923 in unpaid back rent.
Wolverine Building Group Inc. asserted a second priority secured claim in the principal amount of $125,000 as of Wednesday against Authentiki.
“It is anticipated that Wolverine will assert that its claim is secured by substantially all of Authentiki’s assets, including its cash collateral,” Sellers stated.
Sellers is requesting the use of cash collateral to make the repayments. Per court documents, Authentiki LLC has approximately $4,778.85 in cash and MSSH LLC has $283,522.30. MSSH LLC accounts receivable is valued at approximately $2,634.30, which are solely comprised of undeposited credit card payments and inventory of approximately $36,598.84 in Authentiki LLC and $68,050 in MSSH LLC.
Authentiki has 55 hourly and salary employees who are due to be paid Nov. 16. It will owe its employees a gross amount of approximately $67,000, according to the filing. There are other payments owed, including utilities and approximately $32,110.01 in the redemption of gift cards, coupons and sales promotions obligations.
The owners of Authentiki include Sellers, Juniper Engineering Inc., Masters of Run LLC and Michael Sourioller. Their ownership percentages, respectively, are 45.93%, 23.3%. 29.67% and 1%, according to court documents.