Deckers, Open a Month, Is Closed

Restaurant on Long Wharf in Sag Harbor was victim of lost bankruptcy appeal
Despite a busy first month, Deckers Bar and Grill in Sag Harbor is out of business due to a bankruptcy case for Harlow East, the previous restaurant under whose license Deckers was operating. Laura Donnelly

While it is not unusual for a restaurant to open and close in a single summer, the end usually comes after Labor Day. For Deckers Bar and Grill in Sag Harbor, however, closing day has come early.

Harlow East, the restaurant that had been at 1 Long Wharf, the longtime home of B. Smith’s restaurant, for the past two summers, filed a petition for relief under Chapter 11 of the Bankruptcy Code on May 13. On July 1, Rich Decker, operating without a lease under the name Harlow East L.L.C., opened Deckers at the site.

On Tuesday, a judge dismissed the Chapter 11 filing, directing that Deckers shut down immediately. A court-appointed trustee will change the locks and secure the assets, Salvatore LaMonica, a Wantagh attorney representing the landlord, said yesterday.

Mr. Decker said yesterday that the locks had not yet been changed, but that he has followed the order to cease operation. He was in the Central Islip court when the judge made “the most disheartening decision I’ve ever seen in my life,” he said, explaining that he had been brought in to try to “revive” the restaurant while the business was restructured under Chapter 11 guidelines.

He said the judge had given his attorney short shrift. “It was a lynching at best. Twenty-five people immediately lost their jobs,” he said. He declined to say how much he had invested in the new business, but said it was significant.

Patrick E. Malloy III, who owns the building, opposed the Chapter 11 petition, his attorney said in a July 12 filing, on the grounds that Harlow East was “abusing the bankruptcy process” and that it “epitomized a bad-faith filing.” Opening Deckers without informing the court or the landlord, Mr. LaMonica wrote, was a “blatant violation” of the provisions of the Bankruptcy Code and in violation of the lease. “Despite ongoing daily operations, not one penny has been paid to the landlord post-petition, for the debtor’s post-petition liabilities,” he added.

Mr. Decker disputes the claim that the lease was not paid after the Chapter 11 filing, saying that he had canceled checks totaling $54,000 to prove it. No debt was accumulated while he was running the restaurant, he claimed.

“On its face, it appears as if the assets of the Debtor have been transferred to a third party, without Court approval, without notice to creditors, at the expense of the creditors and in deliberate violation of Bankruptcy Code,” Mr. LaMonica wrote.

Richie Notar, co-founder of Nobu, entered into a 10-year lease with Mr. Malloy for an outpost for his now-closed Manhattan restaurant, Harlow, starting on April 1, 2014. The annual rent was $324,000; $27,000 to be paid monthly. Harlow East closed in October after the 2015 summer season, and owes back rent since February 2016, Mr. LaMonica said.

Jon Krasner, who signed the May 13 Chapter 11 appeal as the new manager of Harlow’s operations, said Tuesday in a phone interview that “we are really sad and extremely disappointed,” with the judge’s decision. “We are the most disappointed that our incredible employees will be losing their jobs. These people worked so hard and helped restructure a business that was operating legitimately and now showing extremely high profit margins.”

Mr. Decker said the restaurant was running a 30 to 35 percent profit margin. “This, by far, was the most successful venue out of the gate, and it was just the beginning,” he said. Weddings, birthdays, and corporate sponsorships in August were booked. On July 14, The Star’s restaurant reviewer, Laura Donnelly, praised Deckers “casual dining and moderate prices.”

In his decision, Judge Robert E. Grossman converted the Chapter 11 bankruptcy case to a Chapter 7 filing, meaning that Harlow’s assets will be sold off to pay its lenders or creditors. Under Chapter 11, debtors can negotiate with creditors without having to liquidate assets.

Had the bankruptcy petition not been dismissed, the creditors would have been paid in full, Mr. Krasner said. “We felt like we gave the space and restaurant back to the community, charging reasonable prices, hiring local musicians, and making it approachable and comfortable for everyone.”

Adding to Mr. Deckers woes, his restaurant was cited on different occasions for code enforcement violations and under the Alcohol Beverage Control law. Those charges have yet to be adjudicated.

WITH REPORTING BY T.E. MCMORROW