Zahrco Enterprises Files for Chapter 11 Bankruptcy in Coral Gables

Coral Gables Restaurant Scene

News Summary

Zahrco Enterprises, parent company of popular Coral Gables restaurants like Sawa and C’est Bon, has filed for Chapter 11 bankruptcy amid significant financial distress. The company faces $2.6 million in debts, with a mere $72,000 in assets. Operations have been severely impacted due to the COVID-19 pandemic and issues surrounding their now-closed Ecléctico Restaurant & Bar. Despite these challenges, the company remains hopeful for recovery and aims to continue serving the local community during the restructuring process.

Coral Gables Restaurant Scene Hits a Bump: Zahrco Enterprises Files for Chapter 11 Bankruptcy

In a significant turn of events for the vibrant culinary landscape of Coral Gables, Zahrco Enterprises, the parent company behind beloved dining spots like Sawa Restaurant & Lounge and C’est Bon Cafe, has filed for Chapter 11 bankruptcy. This unexpected move was officially recorded on April 2, sending ripples through the community.

Financial Figures Reveal Struggles

According to documents filed with the U.S. Bankruptcy Court in Miami, Zahrco Enterprises is grappling with a hefty debt burden of $2.6 million while reporting just over $72,000 in assets. This stark contrast raises questions about the company’s financial health and future.

The Chapter 11 filing was initiated by Ramzi Zahr, the vice president of Zahrco, who has been at the helm of operations for Sawa and C’est Bon at the bustling Shops at Merrick Park for nearly two decades. These establishments have, undoubtedly, become staples of the local dining scene.

The Troubling Origins of Debt

So, what led to this distressing situation? Zahr cited a combination of factors contributing to the financial struggle. First and foremost, the lingering effects of the COVID-19 pandemic have left many businesses reeling, and Zahrco is no exception. The company also made significant investments in another eatery, Ecléctico Restaurant & Bar, which unfortunately ceased operations shortly after its launch in 2022.

To add to the woes, Zahrco has seen a rapid increase in short-term debt, driven by the closure of Ecléctico and ongoing disputes with landlords. The cash flow from Sawa and C’est Bon is reportedly insufficient to keep up with obligations, prompting the need for restructuring.

A Calculated Move Toward Recovery

Despite the grim reality, Zahr assures that this bankruptcy filing is a deliberate and considered action. The goal is to promote the long-term health and viability of Zahrco Enterprises, allowing the company to continue its operations while navigating through these challenging waters. Thankfully, Zahrco is not liquidating, which means that loyal customers can still enjoy their meals at Sawa and C’est Bon as the restructuring process unfolds.

Legal Battles and Landlord Issues

Compounding Zahrco’s troubles are legal challenges from Merrick Park LLC, the landlord overseeing the property where these restaurants operate. A lawsuit filed in March 2024 accuses Zahrco and its owners of failing to pay rent and violating lease agreements related to the now-defunct Ecléctico. The suit claims approximately $353,000 in unpaid rent and late fees dating back to August 2023 and alleges that the premises were left in less than desirable condition, necessitating costly repairs.

The landlord also accuses the Zahrs of defaulting on a repayment agreement, with an additional outstanding amount of $55,400 looming over them.

The Bigger Picture for Zahrco Enterprises

Despite these hefty challenges, Zahrco recorded sales of around $1.3 million for 2024 and boasts over $5.7 million in revenue. Their workforce includes more than 40 dedicated staff at Sawa and a dozen at C’est Bon, highlighting the importance of these establishments to the local economy.

Key creditors looming large include the Florida Department of Revenue, First Horizon Bank, and various credit card companies, all contributing to the total debt burden. Zahrco also owes several restaurant vendors, including major distributor Sysco, adding to the financial strain.

Looking Ahead

With only about $11,700 in cash on hand, Zahrco’s future hangs in a precarious balance. However, Zahr holds onto an optimistic view, believing that the restructuring process will ultimately lead to a beneficial outcome for all stakeholders in the Coral Gables community.

As this situation continues to evolve, the Coral Gables community is left waiting to see how this beloved restaurant group will navigate its way out of turmoil and hopefully return to its former glory.