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After sudden closure, Coakley's may return for another course

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Coakley’s Restaurant and Irish Pub in New Cumberland closed by order of the Bankruptcy Court for the Middle District of Pennsylvania.
Coakley’s Restaurant and Irish Pub in New Cumberland closed by order of the Bankruptcy Court for the Middle District of Pennsylvania. - (Photo / )

Coakley's Irish Pub and Restaurant isn't through just yet.

The owner of the landmark New Cumberland bar and restaurant that closed suddenly this summer said he is working with a court-appointed trustee to buy back the items lost through a Chapter 7 bankruptcy filing and reopen the establishment.

If all goes according to plan, owner Timothy Hogg said, he hopes to open both the bar and restaurant again by mid-October or mid-November.

“Fifty percent of businesses in America fail,” Hogg said. “Learning how to fail and recover from failure is one of the most important things a businessperson can do.”

Tracking the money

A new opening is a far cry from the court order that forced Hogg to close the business in July. According to bankruptcy filings, Hogg's Irish Restaurants LP — the business that functions as the Coakley's operator — owed money to both the government and to private creditors.

The Pennsylvania Department of Labor and Industry, the Pennsylvania Department of Revenue and Lancaster lending agency Community First Fund, which helped finance Hogg's purchase of the restaurant in 2008, were all listed as creditors.

Hogg had sought Chapter 11 bankruptcy protection in 2011, allowing him to reorganize his business while still running it. In June, however, the case was moved to a Chapter 7 liquidation of assets at the request of Department of Labor and Industry's Office of Unemployment Compensation and Tax Services.

The office claimed in a June 12 bankruptcy filing that Irish Restaurants owed the department about $15,230 in unpaid unemployment compensation taxes and penalties.

Lawrence Frank, a partner at Thomas, Niesen and Thomas LLC in Harrisburg who represents Irish Restaurants, said 75 percent of all Chapter 11 filings later end up in Chapter 7.

“I see cases all the time, where people who have filed Chapter 11 are working 12, 14 hours a day, but just can't make it work,” he said. “Sometimes it's just hard to survive in the economic climate.”

Hogg said he has been speaking with the court-appointed trustee, attorney Markian Slobodian of Harrisburg, about repurchasing all of the items left behind so that he can open again. Hogg owns the building and is planning to renovate.

Any offer for the remaining equipment would have to be accepted by the trustee. Slobodian did not return messages seeking comment.

“There have been things I've wanted to do for a long time here, and I would have had to close anyway,” he said, mentioning a new concrete floor in the restaurant's kitchen. “This is a chance to do them.”

Tough road ahead

It will be a very tricky proposition for Hogg to open again, said Matthew C. Samley, a bankruptcy lawyer representing Community First Fund in the case. Between negotiations with the trustee, the legal claims creditors have on potentially liquidated assets and whether it's even legally possible, he said, Hogg faces a long road back to reopening.

Samley said Irish Restaurants owes about $130,000 to Community First. The first secured lending organization in the case, Community First has asked the court to award it the venue's liquor license in lieu of payment.

The license is valued at about $240,000, according to court documents. Community First financed Coakley's with $160,000 at the time of purchase.

Even if Hogg can reopen, it likely will be a struggle to build relationships again with his vendors and suppliers, Samley said. He said he isn't sure how Community First would react if Hogg opens the business again.

“What's going to change? There needs to be a real plan and fundamental structure on how this thing is going to operate,” Samley said. “The (court-ordered) financial reports were sketchy. There wasn't a lot of cash flow, and it wasn't as accurate as it should be. It didn't look like there was a lot of cash flow to support ongoing operations. Are you going to scale down operations? Will there be a cash infusion? An investor? That's the real test. Otherwise, it's just insanity, you know, doing the same thing over and over and expecting different results.”

Learning from the past

Both Samley and Frank agreed mismanagement is one of the biggest reasons they see businesses fail. Hogg admitted he made mistakes in his operation of the establishment but said he's learned from them and still believes he can make it successful after his 2008 purchase.

Reopening Coakley's himself is just one option Hogg is mulling. He said he is willing to listen to offers on the property, but he is expecting to make an offer “in a week or two” to the trustee to buy the assets back.

“The funny thing is, we were headed damn near to a record year for sales,” Hogg said. “Everything that happens in this world creates an opportunity. Bankruptcy in America is an opportunity to start fresh.” 

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