As Punch Bowl Social nears reopening in downtown Milwaukee, its new operator and its landlord, the Milwaukee Bucks, are being sued by the venue’s former operator, claiming it owns and wants to remove $4 million worth of personal property left inside the 24,500-square-foot building.
The property in question includes furnishings, trade fixtures, and equipment that Eatertainment Milwaukee LLC, formerly known as Punch Bowl Milwaukee LLC, used to operate Punch Bowl Social from March 2019 to early March 2020, according to a lawsuit filed late last month in the U.S. Bankruptcy Court for Wisconsin’s Eastern District.
Denver-based Punch Bowl Social closed all locations nationwide in March of 2020 at the onset of the COVID-19 pandemic as government restrictions forced the business to shut down. Punch Bowl’s parent company went bankrupt and was sold out of bankruptcy earlier this year to its lender, Texas-based CrowdOut Capital, which has reopened all 15 Punch Bowl Social locations but the one in Deer District. The Milwaukee location has remained closed and missed out on a huge opportunity when massive crowds packed Fiserv Forum and the Deer District during the Milwaukee Bucks’ run to the NBA championship.
Unable to make its minimum rental payment of $73,500 and all rent through 2020 and into 2021, Punch Bowl defaulted on its lease, and the Bucks terminated the tenant’s possession of the premises after the tenant failed to remove its property and trade fixtures. That’s despite attempts by Eatertainment Milwaukee’s lender to negotiate a lease for a new entertainment concept or remove the property from the site on time, according to court documents.
Eatertainment Milwaukee claims MKE BLK4L2 LLC, a Bucks affiliate, “changed the locks and refused access to the premises” instead of allowing the company to collect its property.
In July, the Bucks struck a lease deal with a New Punch Bowl Milwaukee LLC, an affiliate of CrowdOut Capital, to take over the fully furnished building and reopen the entertainment-restaurant concept. The plan was to reopen Oct. 29, court documents say, but the venue remains closed as of Tuesday afternoon.
In the complaint, Eatertainment Milwaukee asks the court to bar New Punch Bowl Milwaukee LLC from utilizing the fixtures and equipment to reopen the venue. Under Chapter 11 bankruptcy protection, Eatertainment Milwaukee claims it’s entitled to the property — everything from the kitchen’s hood system to the four-lane bowling alley on the second floor — and plans to relocate it to New Orleans, Louisiana for use in a new restaurant. If the new Punch Bowl operator uses the property, Eatertainment Milwaukee will “suffer irreparable harm and will not be able to reorganize effectively.”
Countering Eatertainment Milwaukee’s claims, New Punch Bowl LLC filed an emergency motion for relief from the automatic stay, which would allow Punch Bowl to use the property and operate at the site while the case pends in court.
“It is the livelihood of New Punch Bowl and its more than 90 employees— not (Eatertainment Milwaukee) — that depends on the property … (Eatertainment Milwaukee) has no operations, no employees, few—if any—assets, and few, if any, meaningful creditors, other than New Punch Bowl,” according to the motion.
One question at the center of this ongoing dispute is if Eatertainment Milwaukee ever owned the property in the first place.
The original lease agreement between the Bucks and Punch Bowl Milwaukee LLC allows the tenant upon lease termination to “peaceably surrender to landlord the premises, including the alterations, additions, improvements, changes and fixtures, other than (the tenant’s) unattached movable trade fixtures.”
In a declaration, Robert Cornog, who is president of New Punch Bowl Milwaukee, LLC and former CFO at Punch Bowl’s former parent company, claims Punch Bowl Milwaukee LLC “never intended for the fixtures to be trade fixtures.”
Cornog alleges the Bucks provided Punch Bowl an allowance of approximately $2.45 million to purchase fixtures and cover other development costs.
“The fixtures were always intended to remain with the premises, as property of (the Bucks), and never become the property of Punch Bowl Milwaukee LLC,” Cornog stated.
Further, New Punch Bowl argues that Eatertainment Milwaukee gave up possession of the property when it failed to remove the property within the 30-day period granted in the original lease.
According to court records, the company’s lender and manager Sortis Holdings, Inc. had made repeated requests to schedule the removal of the equipment and fixtures before the 30-day period expired. A date was never arranged, and the Bucks ultimately took possession of what was deemed “abandoned” property.
New Punch Bowl counters that while the lender made contact about collecting its so-called collateral on the premises, no one directly from Eatertainment Milwaukee reached out to reclaim or discuss personal property left behind.
“Presumably, the debtor (Eatertainment Milwaukee) remained silent because the debtor owed roughly $1 million in unpaid rent to (the Bucks)—a debt that the debtor now owes New Punch Bowl by virtue of the assignment,” according to the emergency motion.
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November 03, 2021 at 06:31AM
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Former Punch Bowl Social operator, Milwaukee Bucks at odds over $4 million in furniture, equipment - BizTimes Milwaukee
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