Saturday, Feb. 5, 2011 | 2:05 a.m.
CityCenter attorneys this week sided with star tenant Eva Longoria in a dispute in the Beso restaurant bankruptcy case, agreeing the case should not be dismissed as demanded by disgruntled Beso investor Mali Nachum.
Beso and its Eve nightclub at MGM Resorts International’s Crystals mall at CityCenter filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Las Vegas on Jan. 6 to restructure nearly $5.7 million in debt and other liabilities.
Beso, 32 percent owned by Longoria, has been mired in litigation with Nachum and her husband, Ronen, over claims the Nachums were wrongly pushed out of the business.
Beso has also been tied up in lawsuits with former investor Anthony Vicidomine and with contractors demanding to be paid for work on the restaurant.
Mali Nachum filed a motion in the bankruptcy case Jan. 11 charging that the bankruptcy was filed in bad faith and asking that the bankruptcy be dismissed so she could litigate her $400,000 claim against Beso. Because of the automatic stay in bankruptcy cases, the bankruptcy filing put that litigation on hold.
Attorneys for Beso are contesting Nachum’s motion.
“The key consideration is that the filing of Chapter 11 is the only method available to avoid the termination of Beso’s lease with Crystals at CityCenter, which would immediately terminate the business of the debtor and eliminate the debtor’s interest in the tenant improvements which, along with the ongoing operation of the Beso Restaurant and Eve Nightclub at Crystals, are the principal assets of the debtor,” attorneys for Beso said in a court filing this week opposing Nachum’s motion.
Beso’s court filings said that because of its financial struggles it has paid no rent “for most of its existence” to Crystals since opening in December 2009 and now owes Crystals some $1.737 million in back rent.
Disputing assertions the bankruptcy filing was in bad faith, Beso’s attorneys said the business had to seek bankruptcy protection because it was in default on its lease with Crystals, because of the litigation with the contractors and the Nachums and because, the day before the bankruptcy filing, Vicidomine had threatened to attach Beso’s bank account.
Vicidomine had threatened to attach the account if he didn’t receive an immediate $50,000 payment against a $634,000 judgment he won against Beso involving Beso buying out his investment, Beso’s court filing said.
The purpose of the bankruptcy case now, Beso’s attorneys said, is to renegotiate its lease with Crystals, settle with the contractors and recapitalize the business that grossed $14.57 million in 2010.
Attorneys for Crystals chimed in this week, saying the bankruptcy filing was not in bad faith.
“The Chapter 11 proceeding provides a single forum in which the multiple challenges debtor faces can be addressed through a global effort to reorganize and offers considerable advantages over continued, piecemeal litigation that will eventually exhaust debtor’s remaining resources while debtor remains in default of its lease with Crystals,” Crystals’ court filing said.
But Crystals hinted in its filing that Beso’s days at the high-end mall may be numbered should Beso not resolve its internal disputes and straighten out its finances.
“Any willingness by Crystals to renegotiate the terms of debtor’s lease, which appears to be a primary focus of debtor’s efforts to reorganize, is likely to depend upon debtor’s ability to resolve both the (contractor’s) lien litigation and the various internal disputes that seem to have impaired debtor’s ability to operate successfully,” Crystal’s filing said. “Should this case be dismissed, or should debtor prove unable to resolve the issues that led to its Chapter 11 filing, Crystals stands ready to enforce its rights under debtor’s lease.”
It’s not known when Bankruptcy Judge Mike Nakagawa will rule on Nachum’s motion that the case be dismissed.
Beso is represented in the bankruptcy by the Schwartzer & McPherson Law Firm in Las Vegas.
Crystals is represented by the Las Vegas firm Kolesar & Leatham Chtd.