Wednesday, February 15, 2012

Owner of Mood Lounge Building in Bankruptcy, Seeks Authority to Sell Property

In an aspect of the Mood Lounge saga that appears to have received little attention, the owners of the building in which Mood Lounge is located filed for bankruptcy in August of 2011, after having been served with a notice of foreclosure in July 2011.  The bankruptcy proceeding is ongoing.  On January 19, 2012, the bankruptcy judge granted the building owner the authority to employ Charles Papadopoulos and Papadopoulos Properties as real estate agent and broker.  (If there are any bankruptcy lawyers who happen to read this post, it would be interesting to know if a buyer purchasing a property in a bankruptcy proceeding can terminate an existing lease; please post any information to the comments section.)

More information from the filings is after the jump.

And many thanks to a commenter who pointed out the existence of the foreclosure filing, which led to the information on the bankruptcy filing.

Some interesting facts from the bankruptcy filing:
  • In December 2011, the property owner sought approval form the bankruptcy judge to sell the property to Abeba Beyene, the owner of Mood Lounge, for $1.8 million.  In late January 2012, the owner withdrew the request, stating that "the proposed purchaser has been unable to secure financing."
  • The value of the property (1318 9th Street, NW) is listed as $1.8 million.
  • The United States Small Business Administration appears to have provided the owner of the property with a $500,000 second mortgage.
  • Although the owner filed for bankruptcy, its court filings indicate that its assets exceed its liabilities by over $300,000, and it reported positive cash flow in the most recent monthly operating report.
  • As of November 10, 2011, the owner listed assets of $1.843 million and liabilities of $1.499 million.
  • The owner reported monthly income in December 2011 of approximately $20,000.  It is not clear if the Mood Lounge lease is the source of all of the income.

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