Bank of Evil (Formerly Lehman Brothers)
The Despicable Conflict
Warning, what you are about to read is not a politically correct story. This is a true story about how hard working, small business owners can be completely ruined by the mistakes of a greedy, money spending, imprudent big business owner (and his legal team) who borrowed hundreds of millions, filed bankruptcy, and is now walking away with 3.5 million dollars in his pocket and leaving devastated families reeling in his wake. This self-same business man will look you straight in the eye and offer sympathy even as he is slitting your throat.
The Cast of Characters
This is a drama with 3 main characters: the Debtor (our lessor or landlord), the Lender (Lehman Brothers Holdings Inc.) and the Contract Holders (myself included.) My family holds a 20 year lease for a restaurant space in a lodge owned by the Debtor. Almost 12 years ago, we gave up our jobs, sold our homes and uprooted our families, to own and operate a restaurant in a new resort lodge. At the time, the lessor desperately needed us, as he had no knowledge regarding the food and beverage industry. We signed on for a 20 year haul and have been working our backsides off ever since.
Bank of Evil (Formerly Lehman Brothers)
Just a Little Ditti about Being a Restaurant Owner
If anyone out there has any experience in the restaurant industry, you know what an exhausting grind it can be. To run a restaurant is to subject oneself to constant criticism coming from every angle. Your kitchen staff will blame you for their own inadequacies, your customers can be impossible to please (especially if they are the irritable-when-hungry type,) your servers care only about how much they've made in tips today (they all seem to have very short-term memories,) and everyone seems to perceive you as a source of unlimited wealth (this goes for employees, purveyors, charities, local cheapskates and anyone else with an overdeveloped sense of entitlement.) They look around at the busy restaurant in a beautiful location and think: "whoever owns this must be rich." The very next thought seems to be "they should give me their money." This is especially true of our government. Somehow, it is just assumed that if you are a business owner, you can afford to support your employees, your community, your health care system and why not the whole damn country while you're at it. (I did warn you this would not be P.C., didn't I?)
It is never ending; your own employees will rob you blind if you do not keep constant vigilance. They will also hang you out to dry, like our chef of three years who decided to quit on the day of a wedding for 200 plus people. He didn't even so much as give us a phone call.
If you are considering opening a restaurant of your own, know that 14 hour days are average, plan on having chronically sore feet, and expect to not have a whole lot to show for it at the end of the day. By the time you pay the rent or mortgage (with taxes,) payroll (with taxes,) insurance, product and delivery (keep in mind that product is perishable and that freshness is paramount, plus taxes,) utilities (this is huge in the restaurant industry,) supplies (don't forget that everything from glassware to furnishings gets broken and/or stolen on a frequent basis,) and income taxes, there is just not much left for you, the weary owner. This is not an all-inclusive list of expenses, by-the-way, but it may help to explain why 9 out of 10 new restaurants fail in the U.S.
The Drama Unfolds...
As I mentioned earlier, we had a 20 year lease for our business in a certain, unnamed lodge. The owner of this lodge, as well as the surrounding ski and golf resort, borrowed more than $200 million dollars from Lehman Brothers Holding Inc. I should mention here that Mr. Owner had made millions in real estate sales, flew around in a private jet, vacationed in the Caribbean with his entire extended family (and still does) and built a multi-million dollar home during the eight or so years leading up to this point. In September 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection; interestingly, the members of Lehman Brothers' executive investment management committee still received their full multi-million dollar bonuses for that year. Wow, what is it like to be paid millions for screwing up so catastrophically?
About one year later, the Debtor (our lessor) also filed for Chapter 11 bankruptcy protection. The next step for them was to reorganize the way the resort had been run. Never-mind that big, big money (I'm talking millions here) had been squandered over the last decade by the owner's ineptitude, or that the entire resort was top heavy with executive level employees, or that contemptible cases of theft within their own ranks had been uncovered, no, never-mind all that, they decided to focus on the one entity within this resort that was keeping its head above water. Through hard work (it helps keep labor costs down if you do it all yourself) we, the restaurant, had managed to stay out of debt and even eke out a living for ourselves and our family. We had developed a rapport with countless regular customers (by being on-site all the time ) and we had established a reputation for excellent cuisine in a friendly, comfortable environment. And now they sought to take it for themselves despite the fact that our contract with them was only 9 years into the 20 year agreement.
The Climax, but is it the End?
That was two years ago and we have been fighting tooth and nail to hang on to our business ever since. We are depleted physically and financially but still we grapple. About two weeks ago, the Debtor and the Lender filed a Disclosure Statement of a joint Settlement Agreement which must still be approved by the bankruptcy court. This document is over 1000 pages long and seems to be intentionally misleading to the reader, in-other-words, it is not a very "disclosing" disclosure statement. However, by weeding through it, one discovers these important facts:
- All of the Debtors assets are being transferred to the Lender and the Lender plans to own and continue operations of the resort. I.e., Lehman is taking over.
- The value of the resort is estimated at $43 million and the debtor will not be held accountable for the remaining debt owed. (Remember, he borrowed over $200 million.)
- The Debtor will personally receive $3.5 million as a "settlement payment."
- Neither the Debtor nor the Lender (and new owner) will be required to pay back any other creditors (such as the club members who have invested heavily in the entire resort) or honor any pre-existing contracts. Apparently, this is legal if the bankruptcy court approves it.
What does this all mean to me? Basically, it means that if the court approves this agreement, Lehman can just chuck us out on our backsides without even so much as a "thanks-but-no thanks." All of our blood, sweat, tears and dollars, for what? The damnedest part is that we were not the ones who created this mess, got in debt, made stupid decisions or any of it. But we will be the ones to struggle to feed our kids while the engineer of this hornets' nest makes millions for his part in what has turned out to be a major debacle.