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April 24, 2014

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Eva Longoria’s Beso files bankruptcy to restructure debt

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Eva Longoria Parker and Kim Kardashian at Beso and Eve on Dec. 30, 2009.

Updated Thursday, Jan. 6, 2011 | 8:24 p.m.

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The grand opening of Beso restaurant and Eve Nightclub at CityCenter on Dec. 3, 2009.

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Eva Longoria's Beso in CityCenter's Crystals.

Beso, the Las Vegas restaurant and nightclub at CityCenter owned by actress Eva Longoria and co-investors, filed for bankruptcy Thursday to restructure nearly $5.7 million in debt and other liabilities.

Beso LLC, 32 percent owned by Longoria, listed assets of about $2.5 million in the Chapter 11 filing in U.S. Bankruptcy Court in Las Vegas.

The restaurant, which has a nightclub called Eve, projected ongoing losses of $76,000 per month.

Court records indicated Beso may be having trouble meeting lease obligations, with the company reporting $1.8 million owed to landlord Crystals at CityCenter.

CityCenter is the resort complex that MGM Resorts International opened in December 2009.

Beso generated nearly $14.6 million in gross income in the past 12 months, the filing said.

Longoria, who has filed for divorce from Tony Parker, apparently has had to provide cash to keep the business afloat. She’s listed as a creditor, owed $375,000 for legal fees paid on behalf of Beso and another $1 million for a cash loan.

Several construction companies are among the creditors, and the filing noted litigation is pending involving contractors involved in the construction of the club as well as former partners.

A June lawsuit filed in Clark County District Court by Ronen and Mali Nachum, investors and purported managers at Beso, alleged they provided the company a $280,000 loan to help fund construction but were later pushed out of the company without payment.

Clark County District Court Judge Mark Denton on Oct. 27 denied a motion by Longoria and co-defendants that the case be dismissed.

Attorneys for Longoria, Beso and the co-defendants then filed a counterclaim against the Nachums, saying the validity of their ownership interest “is in question because of the existence of irregularities and certain improprieties which may have been committed” in connection with the initial grants of their interests.

The counterclaim says Ronen Nachum was permitted to help oversee the construction of Beso in early 2009 based on his representation that he was a licensed contractor, though Beso says he has never been so licensed in Nevada.

“Due in large part to Ronen Nachum’s mismanagement of the construction process, Beso LLC was forced to request an additional contribution in the form of a $1 million loan by Longoria,” the counterclaim says.

It says Ronen Nachum’s “serial mismanagement” of the construction led to the filing of $1.2 million in construction liens, along with lawsuits and multiple breaches of Beso’s lease with Crystals.

The counterclaim also alleged Ronen Nachum “used threats and intimidation to gain control over the day-to-day operations of Beso with the encouragement of Mali Nachum” and that the Nachums mishandled Beso funds.

Attorneys for the Nachums fired back, denying the allegations and asking in a Dec. 30 filing that $280,000 Ronen Nachum personally deposited into a Beso construction trust account be garnished.

“It would be manifestly unfair for Beso and its agents to terminate their relationship with the Nachums, but use the Nachums’ personal funds to pay for the liens for the construction of Beso,” the filing said.

An earlier lawsuit filed by investor Anthony Vicidomine was settled.

The bankruptcy filing said Vicidomine has been paid $200,000 but is still owed about $651,000 for Beso’s purchase of his interest in the business.

Other litigation disclosed in the bankruptcy filing involves contractors Bombard Electric LLC, Mechanical Insulation Specialists and Perini Building Co.

The company’s assets include nearly $1.9 million in computers, furniture, equipment, restaurant supplies and audio and video gear; and another $172,000 in food and beverage inventory. Some equipment is leased, the filing says.

Besides Longoria’s interest, ownership interests are held by Vicidomine (2 percent), John Torregiani Consulting Inc. (1 percent), Jonas Lowrance (32 percent) and the Nachums’ disputed 32 percent, the filing says. The company is managed by William M. Braden.

A manager at Beso was contacted about the bankruptcy Thursday, but he declined to comment.

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  1. I am inclined to believe that this Chapter 11 reorganization plan will not be approved and that this Bankruptcy will be converted to a Chapter 7. I just don't see any reorganization, even with 14.6 million in revenue, that can overcome $76,000 a month in ongoing losses. Ms. Langorria may end up losing her shirt on this. Hmmmmm, that might not be too bad.

  2. This is another example of an outsider who believes, because she/he ate a hamburger in a restaurant, they can run one successfully. I know. The first time I owned one, I ran it into the ground. Over the next 20-years, my following ventures were far more succesful and, in of all them combined, I never took in close to 14 million! It's not the "big" things that usually do the novice restaurateur in, it's the little things, many of them behind the scenes. It takes experience, not just fame or money, to make a success of any business; the restaurant business being no exception. Additionally, when you don't know the business and rely on others, you may leave yourself open to fraud & embezzlement. Something doesn't smell right here.

  3. birdie, if you think eva's calling you, you really are dreaming. lol.

  4. First, Eva according to the facts revealed in the article is actually going to lose money on this deal, she loaned money to the business and she probably put up some money as an initial investment. Jerry Fink's description of how to lose money in the restaurant business (of which there are a myriad of different ways) sums it up quite nicely. She could have also benefited immensely from reading Anthony Bourdain's book "Kitchen Confidential" in which he goes on at length and in colorful detail about what goes on in these novice restaurant/bar owner situations. The creditors of this outfit should have done their due diligence and protected themselves by securing the debt, cutting back their credit, putting them on COD, etc. Some creditors and vendors were probably willing to take somewhat of a hit, knowing that this restaurant/bar was probably not going to make it like most others. The smart ones got what business they could while they could and took steps at the end to minimize their exposure.

  5. The wife and I ate there a few months after it opened. The food was okay, not that bad, not outstanding. I remember the macaroni and cheese was really good. The decor was great.

    I did request the manager to turn down the music volume. It was only about 7:00 pm but the music was so loud we had troubling talking at our own table and we're in our early 40's....not 80's.

  6. Part 1:

    If a restaurant is not doing enough business to pay its rent, it is destined to fail. If a landlord is unrealistic about the rent its commercial space will generate, based on customer traffic, the tenant will ultimately fail and the vacant space will be an embarrassment.

    We walked Crystals, Aria and the Mandarin Oriental at dinner time, mid week, roughly 6 weeks ago and the restaurants had zero to few customers. Inexplicably, a new pastry shop at the complex, with a door right to the Strip sidewalk, had already ceased business. I thought to myself "I see disaster coming". Even if the landlord cuts the rent to close to zero, for the sake of avoiding high end restaurants failing, if few people go in, sit, order and pay the tab, the restaurant will fail anyway.

    The P.R. about Crystals which was released by MGM Mirage was that they convinced Ms. Longoria to open a restaurant in their commercial center. Clearly, MGM Mirage was trading on Ms. Longoria's celebrity in order to add luster to their complex's image. As a result, the MGM Mirage's subsidiary which owns Crystals cannot fairly be heard to cry about a deadbeat tenant when it is MGM Mirage which has failed to generate foot traffic and customers for the restaurant they enticed to locate in Crystals.

    I read the early litigation pleadings in the lawsuit involving the Nachums, and it appeared that Ms. Longoria initially had a very small percentage ownership in the now bankrupt company. Essentially, she received that small interest for the use of her name. Her increased ownership interest was obtained as, in effect, points for making the $1 Million loan to bail out the now bankrupt entity.

  7. Part 2:

    I've now looked at the Chapter 11 Petition online, and to refute some of the comments here: (1) No bank has lent money to this restaurant, (2) Ms. Longoria has not received a dime either as a return on her ownership interest or as interest on her loan, (3) the dissident investor Mr. Vicidomine has received a refund of $851,000, (4) the fractious investor Mr. Nachum has received $222,000 of the debtor's funds, (5) the largest creditor is the landlord, Crystals, at $1.7 Million, and (6) the payroll for 2010 was not inordinate, only $240,000 per month out of $1.2 Million in monthly revenue.

    What those numbers tell me is that many commenters here have been slamming Ms. Longoria unfairly, in that she has put substantial money into the restaurant and has taken none out. If there are "bad guys" in this situation it is Crystals' owner, as landlord which has been charging high rent when it knew or should have known (1) that substantial funds from the landlord were required to pay for the unpaid tenant improvements and (2) that a substantial free rent period, after the restaurant opened, would be necessary to establish it as a stable business. Both landlord funding of tenant improvements to the standard of "luxury" this project seemingly requires as well as a long period of free rent are entirely customary in the commercial landlording business. As a result, I repeat the underlying questions about the landlord: Does its senior staff really know how to be a commercial landlord? Have the investors in the landlord (MGM Mirage and Dubai World) being unrealistic about the cost of getting their commercial tenants up and running.

    In short, MGM Mirage sought to capitalize on Ms. Longoria's celebrity in promoting City Center, while at the same time its subsidiary Crystals was profoundly unrealistic about paying the costs traditionally borne by a landlord to establish a viable business in a high rent facility.

    And no, I don't know Ms. Longoria or her lawyers, and I don't watch Desperate Housewives.

    If there was a show called Desperate Landlords or Desperate Casino Operators, I might watch.

  8. And the City Center businesses start to fall! Just as predicted by numerous posters on this site last year. Who will be next?

  9. Never stop dreamin Birdie, but Eva isn't going to call, sorry to burst your balloon.

  10. C.O.: Thanks for the excellent post and for providing some much needed factual information from the Bankruptcy filing. We seem to agree on the fact that Ms. Longoria is a unsecured creditor of Beso LLC to the tune of 1.375 million dollars, much of which she stands to lose if Beso LLC is liquidated in Bankruptcy. Where I disagree with you is the obligation of Crystals, the subsidiary of MGM Grand to pay unpaid tenant improvements and grant a free rent period. Most landlords will get what they can when they can and if the tenant can't pay they get them out and lease to someone else. It is up to the tenant, here Beso LLC to negotiate a lease with these provisions in it if it can do so. They apparently negotiated a very bad lease. I wonder if they attempted to renegotiate with the landlord after they discovered that they didn't have the volume of business to support the high rent and to pay for the tenant improvements. If Beso LLC is representative of the other tenants of Crystals I can see why perhaps they were not quick to bend over backwards to make concessions to Beso LLC. Crystals may be hard pressed to service it's debt either to its parent MGM or whomever is providing it's financing.