Bankruptcy

So How's the Economy? Well, You Can't Sell Sin, Apparently. Got Your Answer?

By Joseph McDaniel, Esq.

Grocery stores, for instance, have run at a very small profit margin; in addition, that business has been turned into a commodity. There is little perceived difference between one grocery store and another which permits charging a premium price for groceries.

Gambling, drinking and sex are another story.

But this is a depression. So grocery stores are closing.

And Restaurants are closing.

And now we get to the drum roll: Strip Clubs of various sorts are closing.

In terms of businesses, sex sells. So does ordinary, uncomplicated vice, like smoking, drinking, gambling and gluttony.

We know that casinos in Vegas are hurting. It's harder to gamble if you have zero credit, zero money, and you don't want to sign the go-to-jail-special Las Vegas Gambling Marker, otherwise known as "How dumb are you?"

But guys gotta eat, right? And they like to eat a lot, right? And guys like naked women, yes? And sushi? Okay, the sushi may be a little bit out there, but it's fashionable, right?

So when a place that serves whiskey, and provides all you can eat sushi served on the bodies of naked ladies, is forced to file a Chapter 11 Bankruptcy, what hope is there for other, lower markup kinds of businesses?

Not a lot, I'm afraid.

And you know what makes me the most frightened about the failure of "Gentlemen's Clubs"?

When those go under, who're they gonna tax?

And you know the answer to that question.

Anyway, all you small businesses in Arizona that are having trouble making ends meet, you have nothing to be ashamed of; if you can't sell sin, vice and naughty fun, how you gonna sell frozen yogurt with interesting toppings?

And since somebody is going to think I made it up, here's the article about the two, not one, strip clubs that have filed for separate bankruptcy cases:

February 25, 2010 1:16 PM
Gents' club Cheetahs gets stripped bare

The strip joint Cheetahs filed for Chapter 11 bankruptcy, as did midtown hot spot China Club.

By Lisa Fickenscher

Strip and night clubs in Times Square took a beating this week.

Two hot spots, China Club and Cheetahs Gentlemen's Club & Restaurant, are seeking bankruptcy protection and filed for Chapter 11.

China Club's filing blamed the fall of Lehman Brothers for its financial troubles. Located on West 47th Street, just a few blocks from Lehman's former headquarters, the investment bankers were regular patrons. The club also said in the filing that business began declining in 2007.

The club, a New York City institution since 1986 when it first opened on the Upper West Side, listed both assets and liabilities between $1 million and $10 million.

Cheetah's does not have a storied past. But the club that opened in 2007 certainly has a story. It's known for serving all-you-can-eat sushi served on partially naked women.

Trend-spotting newsletter Urban Daddy described the experience as the ancient Japanese art of nyotaimori, or "female body presentation." Web site The G Manifesto described Cheetahs as one of the Top 10 strip clubs in New York.

The owner, Larry Gribler, is apparently involved in litigation over ownership of the club and is considering selling it, according to his lawyer, Douglas Pick of Pick & Zabicki. Mr. Gribler is president of Three Amigos SJL Inc., which is the corporate parent of the club.

The Cheetahs bankruptcy filing also lists both assets and liabilities of between $1 million and $10 million.

In 2008, Cheetahs reported revenues of $2.5 million, according to Mr. Pick.

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P.S. At one point I was asked to read the depositions of the dancers in a local Phoenix, Arizona Chapter 11 strip club.

Turned my hair white.

I had no idea.....

P.P.S. So when all the strip clubs convert from Chapter 11 cases to Chapter 7 cases, which happens frequently, won't they be surprised at the Unemployment Office? I'll bet they never saw shoes that high.

P.P.P.S. Over the years, I have had occasion to wonder why I saw so few strippers, as opposed to other professionals, in my office.

The answer came to me recently: they have to provide the trustee with three years of tax returns, like everybody else. Except that they don't have tax returns. Or at least tax returns that are consistent with their bank accounts.

So filing a Chapter 7 bankruptcy for a stripper has additional complications. Could they be overcome? Certainly, but they should not be overlooked, because they could cause serious problems in such bankruptcy cases.

My first thought is that the stripper would probably need to amend several years of tax returns to show actual income, and then file a bankruptcy to discharge the debt that could be discharged, and then file an offer and compromise during the next year, and then get back to business as usual.

If the clubs in Arizona close, I guess I'll find out.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 09, 2010 (boomark / email).