Vic's owner files bankruptcy

Financial heartburn continues for Vic's Restaurant owner Fred Sears, but the Spring Lake-area business will remain open as usual.
Marie Havenga
Aug 31, 2012

Sears filed for bankruptcy on Wednesday to avoid a Sheriff's Department sale that was scheduled for Thursday as part of foreclosure proceedings by Chase Bank. Because of bankruptcy rules, the property could not be sold after Sears filed for Chapter 13 protection.

“I filed for the sole purpose of saving my business and having my employees keep their jobs,” Sears explained. “I am not in need of bankruptcy. I have a stellar credit score.”

To see the official legal case filing, click the Related File below the story.

In early July, Chase Bank officials posted a Notice of Foreclosure on the door of the restaurant, 14977 Cleveland St. in Spring Lake Township. The document announced a loan default and a public auction for the property at the Ottawa County Courthouse.

The original date for the foreclosure sale was Aug. 9. Chase Bank extended that three weeks to Aug. 30, according to Sears.

Chase officials said in a statement in July that they were willing to work with Sears.

“The firm has been working with the customer for many months and will continue to work towards an amicable solution,” a Chase spokeswoman wrote in an e-mail. “It's always the firm's intention to do what is best for the customer.”

Sears and his Grand Haven-based attorney, Paul Winter, both said the restaurant owner has continued to make his payments to Chase Bank. They said the most recent payment was made Aug. 22.

According to Winter, the bank considered the loan in default because it was in the name of Sears' mother, Gwendolyn A. Victor. She died in December 2011.

Winter said the mortgage contained a clause that death constitutes default.

“Our goal all along has been to refinance or come to some different agreement with the bank,” Winter said. “We understand there's a loan against the property that needs to be paid. That will have to be done. Fred has been working on that. He's been paying the note all along.”

Chase Bank officials did not respond to the Tribune's request for comment on Thursday, but did say the foreclosure sale had been “postponed.”

Sears filed for Chapter 13 through a Grand Rapids bankruptcy attorney, Steven Bylenga.

“The bank was notified of the bankruptcy,” Winter said. “They adjourned the sale. As a result of Fred filing for bankruptcy, it stayed the (foreclosure) proceedings.”

Sears said he has told many of his customers about the bankruptcy filing.

Spring Lake Township resident Lon Varaljai drank a beer at Vic's bar Thursday night. He said he fully supported the restaurant owner.

“It's ridiculous what the bank is doing,” Varaljai said. “In these times, with people struggling to keep businesses going, to put a place like this out of business would be insane. It would be an injustice to the community.”

“I think it's totally wrong,” another customer, Spring Lake resident Mark Malloy, said of the foreclosure proceedings. “Vic's is an icon in the area. For big banks, it's all about the money. Small businesses like this get the crap kicked out of them. ... This is our place.”

Becky Keeler of Fruitport, who was also patronizing Vic's bar on Thursday, said she could empathize with Sears.

“I know what he's going through,” she said. “I filed Chapter 13 and Chapter 7. Been there, done that. If that bank can't finance him, what is their problem? He's just trying to hold on to what he's got.”

Sears — who said he hopes to obtain other financing for the business — said filing bankruptcy affords him options, including time.

Chapter 13 protections can last up to five years, according to Winter.

Sears said he plans to continue to make his monthly payments to Chase, just as he did before the bankruptcy.

“I'm not a lawyer. I'm not an educated man,” Sears said. “I just believe in right and wrong. I'm not looking to gain anything. I'm looking to keep what I've got.”
 

Comments

ohwell

Don't need bankruptcy???? Then why file (if one is paid up on their loans) the bank would not be "knocking" on ones door.

DKS523

You didn't read the article very well Ohwell. The bank was going to auction it off because the owner's mother's name was on the mortgage, and his isn't. He did keep up on the payments! The only way to save the business is to file bankruptcy. The bank doesn't care about anything except their money.

christopher

Of course. I know it is popular to knock banks these days ... and I know that this is actually a pretty sad story. On the other hand, banks are there to care about money. That is their job. They are not there to care about people. I can assure you that the stock holders would be furious if banks started to act like social service agencies or charities. They need to care about the bottom line.

I also fully understand that caring for people can be important to the bottom line, but banks are in business to make money / get a return on investment ... not to care, be compassionate or be a charity.

I am not suggesting that we should not be good to each other, but don't confuse the ideal goal of humans to be kind and caring and good to our fellow humans with the ideal goal of corporations to turn a profit and provide a return to their investors.

I hope both caring and a return on investment can happen in this case, but let's be careful about throwing out comments about caring only about their money when in fact that is what a corporation does by definition.

LakerVille

Granted we don't have all the facts, but assuming I am the lender of this loan and I built in a clause that it is an automatic default on the loan if the person dies. At first it makes sense that I don't do anything other then continue to collect payments for 8 months after the death because why not it's free money and I need time to assess the property. Then I enact my clause after assessing the property. It is possible that this land is more valuable to the bank then the loan itself. It is outside of the village, so has less taxes, is on a major interesection, and sits on a huge chunk of land that could be redeveloped for a good chunk of change. All I know is that if I lended that money, I wouldn't forclose unless I had a plan for the property, why would I turn down payments?

looking forward to see how this shakes out.

christopher

If this is the "full story", it is an amazing less to people about estate planning and advanced business planning. I can certainly understand why the bank needs to have clauses that will protect them (through establishment of default) then the person taking out a loan dies, but it seems as if money is still coming in "common sense" would prevail and the money would keep collecting payments. On the other hand, I also understand that a financial institution can not simply keep a loan on the books when the person responsible for the loan is dead,

It is a sad situation for all involved and I hope they can keep it going and hope that Chase comes up with some common sense.

With that said, I also understand that it is possible that we have not heard the whole story.

In any case, this is a sad situation.

ohwell

If that is the case (and yes I read the original article about the death of his mother), and his credit is stellar (his words, not mine). Then why not just refinance to get a loan in his name? Problem solved, and a better way to save the business. Not file bankruptcy. How about being taking ownership of their problems, instead of looking for the easy way out. I think there is more to this story than is being disclosed. I am sure the death clause was in the original loan documents.

LakerVille

Maybe the bank isn't allowing him to re-finance? They are foreclosing on the loan because of the clause. The bank has not said he wasn't making his payments, they have also haven't said they would allow him to take out a loan in his name. You are making assumptions, wait for the facts and see how this shakes out instead of insulting the man. You don't know him, you don't know his situation, you don't have inside access to the thought process of Chase bank. Reserve judgement until everything shakes out.

ohwell

There seems to be information that he wants out about the bank. Now all of a sudden he wants the easy way out, by filing bankruptcy. If he tried to refinance, and the bank wouldn't allow it, then that should be in print also. No I don't know him, but this story is trying to make Chase out to be the bad guy. There is more to this story than is being told.

LikestoEat

Am I missing something here? How can a bank stop you from refinancing? Yeah maybe with the same bank. But I have never heard of a bank not accepting a payoff from another bank that has given someone a loan.

dotherightthing

It seems like an abuse of the legal system to file bankruptcy when you do not need it. But after reading the yahoo online review of this poor man’s Grand Haven attorney it appears he has hired a lawyer that has no idea what he is doing. Might be time to shop around for a new lawyer.

LikestoEat

Might be had to "settle" for this one. Fred has listed a law firm as a creditor in his bankruptcy filing.

PeopleAreAmazing

I like their pancakes.

El Bobbo

My wife and I have been satisfied customers for more that 30 years going back to Vic's original location. We extend our best wishes to the family hoping this matter is settled satisfactorily in their favor. We would hate to lose the best Mexican restaurant this side of the Rio Grande.

LikestoEat

Like many, I LOVE to eat at Vic's. And like many, I do not believe we are being told the whole story.
I do not personally know Fred and I do not have any reason not to believe what he has said publicly. I do know that banks, and Chase is no exception, will not comment about the specifics surrounding the loan, the foreclosure and the bankruptcy. So we will only hear Fred's side other than what we can learn from the bankruptcy filing, which is public information.
That being said, I do know that Fred has been attempting to sell the restaurant ever since his Mom passed. Perhaps this is why Chase held off so long in dealing with the loan default. If anyone has "stellar" credit, even in this economy, with a solid business plan and experience such as what Fred and Vic's has, I find it difficult that a refinancing could not have happened before now, even if that meant refinancing with a bank other than Chase. Whether or not this has been attempted, only Fred knows that answer. But if the payments have been made on time during the past year since his Mom passed and the business is doing good, then why did Fred not have the $274 filing fee needed to file bankruptcy? He petitioned the Court to pay this fee in installments. Come on $274!!! In the filing for bankruptcy, Fred listed 10 creditors, including Chase, Estimated his assets at only $50,000 and estimated his debt at between $100,000 and $500,000. I'm no lawyer, but if he is claiming to be the sole beneficiary of the trust that owns the restaurant and property as the reason he can file bankruptcy, and he lists the loan in question as part of his estimated debt, why did he not list the restaurant and property as part of his assets? All the papers required to be filed were not filed. They are due within 14 days. The decision to file bankruptcy was so last minuet that Fred didn't even have all the necessary documents to file bankruptcy. For those that are interested, the first creditors meeting is scheduled for October 3, 2012 unless postponed.

ghresident

Why did he not list the restaurant and property as part of his assets? He cant because they dont belong to him..............

LakerVille

The loan isn't in his name, therefore he can't refinance unless the bank agrees. The loan was in his moms name. You don't inherit other people's loans after they die.

ghresident

After reading all the responces, sounds to me like there alot of you who dont understand all the factors behind this ordeal. Commercial loans are alot harder to obtain than a residential loan. Banks have to consider all the aspects of the business first, profit & loss margins. Yearly revinues and the list goes on and on. Lets not forget about the economy and all the forclosures out there now. To break all this down, Fred may have been the sole beneficiary of the business, however he has nothing to do with the physical property and assets. Fred was basically an employee all these years, his income also plays a big part in getting the loan even with A1 credit. I find fault from three sides here, his mother for not protecting the loan with Fred on it or rewriting the loan long ago, Fred for not handling his taxes. The 2011 corporate returns are on extension and aren't due until Sept. 15. and the bank for not working in a timely manner to re secure the loan. Chapter 13 was Freds only option to delay the Sheriff's Department sale that was scheduled for Thursday as part of foreclosure proceedings by Chase. If this sale would have happened Vic's would be closed right now and possibly forever. Fred didnt file chapter 13 just to file, he did this to protect the family business and to re secure a loan to keep the business and his employee's jobs.

LikestoEat

Perhaps ghresident didn't read the papers attached as part of the article. Fred's attorney is claiming that, as sole beneficiary of the trust that owned the real property, Fred now has an interest in the real property and that is his basis for filing bankruptcy, to protect the real property. The business of Vic's Restaurant is a totally separate thing. There is a separate corporation that "owns" the name and other personal property of the business of Vic's Restaurant. That corporation and the name and business of Vic's Restaurant is not part of the bankruptcy. Even if Fred were to lose the property, he still owns the name and business and could move that anywhere. I agree with ghresident that commercial real estate mortgages are very different and very difficult to obtain. My guess is that either Fred and/or his Mom have over the years refinanced that commercial real estate loan several times and now owe more than the property is, in this economy, worth. Like so many other people did with their home mortgages, OR like many of us, have seen the value of the property decline to where they are "under water" with their mortgage and can't, even with "stellar" credit, obtain a new commercial mortgage from any bank, without a substantial pay down of the principal balance, which as Fred didn't even have the $274 to file bankruptcy, would not be possible. I do not fault Fred for filing bankruptcy to protect his employees jobs. I am not privy to what if any steps Fred has taken since his mom's passing to refinance the mortgage with Chase or to obtain a new mortgage from another bank. This should be a wake up call for all family business.

ghresident

LikestoEat, I did read the filing. Yes the court documents do say Fred has an equitable interest in the trust property, however with the passing of Fred's mother this put the loan into automatic default by Chase. Even with Fred making payments, the origional signer of the note is deceased leaving Chase soley holding the note with little options to Fred. Now if the note would have been re wrote including Fred's name, we probably wouldnt be where were at today. Yes most all 13 cases ask for the filing fee upfront, its not uncommen to include these fee's in the case though. I dont see them as "way under" in there mortgage acording to the press release dated July 10th 2012, it states $249,490 is due on the mortgage made by Gwendolyn A. Victor as trustee on behalf of her husband's trust (Ernest J. Victor) in 2003. My wife and I have been customers of Vic's for many years. We wish only the best for Fred in keeping his family business alive and well for years to come.

ohreally

Gh you are exactly right. Fred, although operating and running the restaurant, never truly owned the property, his mother did. Now honestly it makes sense for Chase to default as Fred doesn't inherit the loan that his mother had when she died, however then the bank would demand money from beneficiaries (Fred) or the building would become property of Chase. The part that steams me however is that Chase is not working with him to acquire financing in his name. The only conclusion I can come to is that either Vic's cannot prove that they are making enough to cover the loan (which I doubt) or Fred cannot show that he makes enough to cover the loan (which depending on how the books look could play a factor). Gwen should have had Fred's name on the loan before she died. The other factor is that Fred (last I knew) was not the sole owner of the business. I'm not an attorney and I don't work for the bank so I'm not sure how that plays into proving income, etc. Regardless of these factors, you have a man who recently lost his mother, is continuing to pay the bank note that was left in her name (and is proof that he can pay the note), and just wants to keep his business up and running. Throw him a flippin bone.

LikestoEat

Slowly, we are getting other pieces to this story. It seems that a couple of responders here want to push the "blame" on all this on Fred's Mother, Gwen. I will agree it was not very good planning on her part, and on Fred's, for not having Fred's name on the mortgage. At the time the mortgage was taken out and up to the time of her passing, I am sure that Gwen and Fred had their reasons for not putting Fred's name on the mortgage. One of which could be that Chase would not accept Fred as an co-assignee, with Gwen, on the mortgage. Only Fred knows why this was not done prior to Gwens' passing. ghresident claims that Fred had "little options" after his Mom passed. However, Fred had at least 3 options. One, to re-finance the mortgage with Chase, Two, obtain a new mortgage from another bank and payoff Chase and/or Three, sell. Fred has attempted to sell the restaurant since his Mom's passing. In this economy and the price he is asking, I can understand why there have been no offers. The new piece to this story has been contributed by ohreally. I was not aware that Fred was not the sole owner of the business. This could be the main reason why Chase, or another bank, will not refinance or place a new mortgage on the property. Fred's business partner or partners, may not want to refinance. Maybe they just want out, hence the reason for attempting to sell the place. Or maybe the partner or partners don't have the "stellar" credit Fed has. Maybe with splitting the income from the restaurant two or three ways, none of the owners of the business have sufficient income to back a refinancing or new mortgage. And as much as ohreally doubts that the business isn't making enough, maybe, just maybe, they aren't. And all banks, especially Chase, is not going to "flip a bone" to anyone just because their Mom passed away and they could care less about keeping a local institution like Vic's in business and employing local people. For them it's all about the money. That's why we all our in the economy we are in today.

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