The estate of Tavern on the Green LP canceled its intellectual property rights auction Wednesday after failing to receive any competing bids.
According to Chapter 7 trustee Jil Mazer-Marino, TOTG will move forward with the sale of its IP rights to stalking-horse bidder Tavern International LLC for $1.3 million. Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan will consider the approval of the sale on Sept. 26.
Tavern International is a new entity created by the owner of TOTG's oil and packaging food license, Tavern Direct, and some additional outside investors. Tavern Direct is owned by Lou Bivona. Streambank LLC marketed the IP assets for sale.
The estate of the former landmark New York restaurant reached an agreement over its IP with New York City in May, after more than a year of face-to-face meetings, conference calls and myriad drafts of documents regarding the dispute.
Through the agreement, the buyer of the Tavern on the Green name will have to locate its restaurant outside of New York, New Jersey, Connecticut and certain parts of Pennsylvania.
The buyer will also have to attach the location to the name, such as Tavern on the Green-Las Vegas, and the restaurant will have to comply with certain quality control requirements, court documents said. The city could use the Tavern on the Green name within New York's five boroughs. The buyer could use the Tavern on the Green name on products 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.
The debtor's estate will use the sale proceeds to repay secured creditor TD Bank NA, owed $2.4 million.
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 TOTG, 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 with New York, 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 was withdrawn through the settlement.
TOTG closed on Dec. 31, 2009, then auctioned off its chandeliers, artwork, murals, kitchen equipment and other items in the Central Park restaurant. The items, however, sold for less than one-quarter of their $8 million appraised value at the three-day auction in January 2010. TOTG filed for Chapter 11 on Sept. 9, 2009, after the city's Department of Parks & Recreation opted 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 said.
The case was converted to a Chapter 7 on March 10, 2010. Alan Marder at Meyer, Suozzi, English & Klein PC represents Chapter 7 trustee Mazer-Marino.
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