A Pennsylvania bank that got burned on a $1.5 million loan is trying to collect the debt from Culinary Depot, a Monsey company that allegedly ended up with the funds.First National Bank of Pennsylvania loaned the money to Seasons Corporate LLC, a Long Island developer of kosher supermarkets that filed for bankruptcy last year. But the bank claims that Culinary Depot received the funds and has ignored demands to return the money.
First National Bank sued Culinary Depot on Feb. 15 in federal court in White Plains, accusing the commercial kitchen equipment company of unjust enrichment.
Culinary Depot did not respond to an email request for comment.
The financing was for a new store in Cleveland. A First National subsidiary agreed last June to loan up to $3 million to a Seasons’ affiliate, according to the complaint, and the bank advanced $1,505,500 to Culinary Depot for supermarket equipment.
Culinary Depot did not provide the equipment, the bank claims, and Seasons immediately defaulted on payments. Seasons now owes more than $1.6 million.
First National claims that Seasons mispresented its financial condition when it got the loan. The month before the deal, the complaint states, an $8.3 million court judgement was entered against Seasons and its bank accounts were frozen.
By failing to disclose the judgment, the bank claims, the Seasons affiliate and its president, Zvi Bloom, had committed a fraud and Culinary Depot had “retained the funds and has refused to return them.”
Seasons, of Inwood, Nassau County, filed for Chapter 11 bankruptcy protection in September, declaring $31 million in assets and $42 million in liabilities.
Bloom and Mayer Gold had acquired several kosher supermarkets, including a store in Scarsdale, in 2010. The stores were profitable, according to a bankruptcy declaration, but their cash flow was drained to develop new stores and make payments to the previous owners.
Last year, an arbitration panel awarded $8.3 million to the previous owners and directed Seasons to pay the award by the end of April. It was not paid, and then Seasons signed the equipment financing deal with First National.
First National has submitted a $1.6 million claim against Seasons in bankruptcy court. But an outside restructuring firm has declared that it is impossible for Seasons to reorganize the business.
A $12 million bid has been submitted to buy Seasons’ assets. But secured creditors are owed more than $7.7 million and two unsecured creditors ahead of First National, by claim amounts, are owed $16.8 million.
First National claims that Seasons filed for bankruptcy protection to avoid repaying the loan. Though Culinary Depot was not a party to the transaction, it was a beneficiary.
“As such,” the bank alleges, Culinary Depot “came into possession of the funds by means of deceit and/or trespass” and owes the bank more than $1.6 million.