* Creditors claim NYC hurting chances of return
* Seeking to convert case to Chapter 7 from Chapter 11
By Chelsea Emery
NEW YORK, Feb 23 (Reuters) - New York City’s claim to the name of the landmark Central Park restaurant Tavern on the Green has caused crippling delays and left some creditors with little chance of getting their money, the bankrupt restaurant’s unsecured creditors committee said.
The committee’s comments came in court documents that asked a judge to liquidate the company that owns the once-vaunted restaurant under Chapter 7 of U.S. Bankruptcy Code. The company originally sought to reorganize under a a Chapter 11 filing.
“The city’s conduct not only has adversely affected the value of the debtors’ assets, but has also burdened the debtors’ estates with considerable professional fees and expenses, which in tandem have sounded the death knell for any prospect of meaningful recoveries to unsecured creditors,” said the official committee of unsecured creditors in court documents dated Monday.
A Chapter 7 proceeding allows a trustee to oversee the orderly wind-down of an estate, rather than paying professionals who are trying to reorganize.
“The City appropriately defended its interests — including its right to reoccupy its own property in Central Park and the Tavern on the Green trademark,” said Gabriela Cacuci, senior bankruptcy attorney, NYC Law Dept, in an emailed statement.
New York City claims it owns the valuable Tavern on the Green trademark. Without the name and the prestige it conveys, the property is languishing, with its future in doubt, the committee said.
Judge Miriam Goldman Cedarbaum at the U.S. District Court for the Southern District of New York has yet to rule on the dispute over the ownership of the name and other intellectual property.
Tavern on the Green, known for its sparkling chandeliers and painted murals, was a favorite place for tourists and celebrating special occasions. It filed for bankruptcy protection on Sept. 10 and ceased operations on Dec. 31.
A three-day auction of art, antiques and serving items resulted in a recovery of less than one-quarter the $8 million appraised value, according to documents.
The company would have to realize at least $5.8 million from a sale of the Tavern trademark, auction proceeds, outstanding receivables and other items before any cash was returned to unsecured creditors, they said.
“The committee believes that this is unlikely to occur, particularly given the ongoing trademark litigation ...,” said the creditors, who are being represented by Norman Kinel of Duval & Stachenfeld LLP.
The bankruptcy case is In re: Tavern On The Green Limited Partnership, U.S. Bankruptcy Court, Southern District of New York (Manhattan) Bankruptcy Petition, No 09-15450. (Reporting by Chelsea Emery; Editing by Derek Caney)