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October 16, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Lenders sue Red Hat on the River bistro in Irvington for $2M

Lenders in Red Hat on the River, a popular dining destination in Irvington, are suing the owners for $2 million.

In Your Hat LLC says it loaned $700,000 to launch the bistro in 2007 and later another $100,000 to keep it going, but late last year, owners Mary Beth Dooley and James Parker stopped making payments.

Red Hat on the River bistro, Irvington

“This is a dispute that goes back 10 years,” Dooley responded in a brief telephone interview.

She would not discuss details, but said there will be no impact on restaurant operations, adding “we hope to resolve it quickly.”

Dooley and Parker opened their French bistro on Main Street, Irvington, in 2002. In 2007, they leased a space across the railroad tracks at One Bridge Street, in the former Lord and Burnham greenhouse factory.

The couple transformed a boiler room into an airy, two-level brick and glass space and rooftop bar, steps away from the Hudson, with panoramic views of Manhattan, the New Jersey Palisades and the Tappan Zee Bridge.

The menu features French bistro classics, such as steak frites, steamed mussels and duck and pork confit, as well as a mélange of comfort foods, Mediterranean cuisines and regional American dishes, ranging from seafood to pork chops to burgers to tacos. It’s a great place “to get yourself in a really great mood,” New York Times dining reviewer Steve Reddicliffe wrote in a 2014 review.

In Your Hat was formed with the sole purpose of funding Red Hat Bistro LLC. The lender group includes Sushil Malhotra, Frank Martucci, Jeffrey Reich and William Thompson.

The loan’s interest rate was set at the prime rate and capped at 10 percent. Under the agreement, the lenders also received a share of gross receipts, starting at 4 percent on the first $1 million and culminating at 7 percent above $2 million.

They also got free food. Every month Martucci got seven $100 dining coupons to distribute among the investors “as he sees fit,” according to the funding agreement.

Dooley and Parker secured the loan with a second mortgage on their house in Irvington.

The agreement was revised in 2009, increasing the funding by $100,000, setting the share of gross receipts at a flat 3 percent and doubling the dining allowance to 14 coupons.

Martucci, Reich and Thompson had also made a short-term loan of $150,000 in 2007. That was paid off by 2009, and the second mortgage was satisfied.

The agreement was amended again in 2013, creating a new five-year loan as of 2015, on an expected principal balance of $637,000.

The agreement was revised, according to the lawsuit, filed in Westchester Supreme Court, to do everything possible to assist in Red Hat’s success. In Your Hat says it has received no loan payments or percentages of gross receipts since November 2017.

The lenders claim that Red Hat and its owners have mischaracterized the terms of the funding agreement and have stated in a letter their intention not to abide by the deal. The bistro is currently $75,000 in arrears, the lawsuit says, with damages ultimately totaling $2 million.