Celebrity chef files for Chapter 7 bankruptcy
Last month, we wrote about the automatic stay, a useful bankruptcy tool that immediately halts all creditor claims, collections and lawsuits at the moment of a bankruptcy filing. Most often, such a stay fulfills a legitimate need of the bankruptcy filer: to suspend creditor claims, giving the debtor the time and freedom to get his finances in order while also avoiding foreclosure and other financial consequences.
But what happens when a debtor abuses the automatic stay process, using its protections to stall legitimate legal and financial claims? This is the allegation against celebrity chef Geoffrey Zakarian, who recently filed for Chapter 7 bankruptcy in the face of a lawsuit filed against him by over 150 former cooks and other restaurant employees.
Zakarian is a regular on the Food Network, appearing on four programs including “Chopped.” In addition, he owns and operates several prestigious restaurants across the country, all of which have been on the receiving end of much critical acclaim.
The class action lawsuit was filed by former employees of the now-closed restaurant, Country, which was owned by Zakarian and two partners. In the suit, the employees allege that Zakarian failed to pay them sufficient overtime pay, that he falsified payroll records, and that he deducted amounts for staff meals that the employees did not receive. The lawsuit asks for $1 million in damages and an additional $250,000 in penalties.
Early last month, Zakarian filed for Chapter 7 bankruptcy in a federal bankruptcy court, stating that he had only $50,000 in assets and potential liabilities of over $1 million, depending on the outcome of the lawsuit. With the filing, the litigation was put on hold until the bankruptcy is resolved or until a judge rules otherwise.
The attorney for the class of plaintiffs has stated that he does not consider the bankruptcy filing legitimate, and that he will move to have the class action go forward despite the bankruptcy.
Source: The Seattle Times, “Star chef, facing a suit, files for bankruptcy”, Nick Fox, 27 April 2011