Downtown Eatery Files For Chapter 11
Dave’s Taverna Owner Reorganizes
Posted: February 12, 2013
Dave’s Downtown Taverna in Harrisonburg is reorganizing under bankruptcy proceedings. The business will continue operating, owner David Miller said. (Photo by Michael Reilly / DN-R)
Dave’s Downtown Taverna LLC is reorganizing under federal provisions that free businesses from the threat of creditors’ lawsuits while they restructure their finances.
The limited liability company, owned by David Miller, consists of its namesake on South Main Street, as well as a takeout and delivery location, Dave’s Taverna Express, on Port Republic Road near Interstate 81.
Both businesses will continue to operate during the proceedings, Miller said Monday.
“When we come out of it in August or September or whatever, Dave’s Downtown Taverna will … be stronger [than ever],” he said.
Miller voluntarily filed for Chapter 11 protection on Dec. 13 in U.S. Bankruptcy Court for the Western District of Virginia, court documents show.
He also voluntarily filed for Chapter 7 personal bankruptcy on Jan. 30, but Hannah Hutman, a Harrisonburg attorney representing Miller in Chapter 11 proceedings, said the two are separate cases.
And the personal bankruptcy case won’t affect the business proceedings, Hutman said.
Under Chapter 11, debtors develop a reorganization plan to pay off creditors, and a majority of the creditors must approve the proposal.
Chapter 11 is what General Motors and Chrysler used to reorganize, a process the automakers began in 2009 with the backing of the federal government after the economic downturn combined with massive debt threatened to shutter the companies.
Dave’s has received approval to continue operating and provided information about its operations to the court, Hutman said, and its next step is to file a reorganization plan.
Dave’s Downtown Taverna LLC has assets of about $430,000 and liabilities of $1.82 million, according to court records. Its largest creditor is Union First Market Bank, which is claiming nearly $821,000.
Union First also has a deed of trust against the building the houses Dave’s Downtown Taverna at 121 S. Main St., Hutman said. The two-story building is owned by a trust in Miller’s name.
The bank has agreed to allow Dave’s to continue to operate in the space, Hutman said.
Miller said a “perfect storm” led to his decision to file for Chapter 11.
He said he has been aggressive about growing both his businesses and downtown Harrisonburg as a destination over the past two decades.
A founding member of revitalization group Harrisonburg Downtown Renaissance, Miller has been recognized for his efforts to restore the city’s center.
But he said that Harrisonburg’s infrastructure, specifically parking, has not kept up with the growth of his business and other downtown establishments.
The limited availability of parking, Miller said, created an upward limit to his business in terms of how many customers Dave’s could serve.
“The business is fine, but the problem is all of that money I used to expand comes at a cost,” he said. “In order to absorb the cost, your business has to continue to expand. My capacity is limited by the capacity in downtown Harrisonburg.”
Miller pointed to a parking study conducted in 2009 that found downtown Harrisonburg had sufficient parking at the time, but an additional 450 to 500 spaces would be needed within four years.
“It’s my opinion we’ve passed the tipping point,” he said.
In December 2010, City Council rejected proposals to build parking decks downtown from three companies, citing a lack of funding.
Miller said he doesn’t blame the city for his current position, but he should have held off on expansion until the downtown infrastructure could support a restaurant of his size. Dave’s Downtown Taverna, which serves American and Greek-style food, is one of the largest in the state.
“I saw the train wreck coming, but nobody would listen to me,” he said. “I didn’t make the appropriate decisions on my end.”
A longtime restaurant worker, Miller became a downtown business owner in 1994, when he purchased Gus’ Taverna from Gus Floros. The space on the northwest corner of Main and Water streets is now home to The Corner restaurant and bar.
Miller changed his restaurant’s name to Dave’s Downtown Taverna in 1996 and opened Dave’s Taverna Express the following year with his former wife.
In 2002, the restaurant moved to its current home, which involved a nearly $1 million renovation. Dave’s seats more than 450 in four separate dining rooms, and added a rooftop terrace in 2006.
Miller said he invested about half a million dollars in the rooftop expansion and to move Dave’s Taverna Express a block west to its location on Port Republic Road at Dukes Liberty gas station in 2007.
From the time he purchased his restaurant to today, the number of eateries in downtown Harrisonburg has jumped from a handful to more than 30.
In 2010, the Virginia Hospitality and Travel Association named Miller Restaurateur of the Year for his community involvement and outstanding leadership in the restaurant industry, according to the trade group.
Downtown’s unexpected growth has made it difficult for people to come and enjoy the fruits of its advocates’ labor, Miller said.
“For lack of a better term, we’re just a victim of our own success,” he said. “We did so well that we’ve now created this capacity and accessibility issue.”
Contact Jeremy Hunt at 574-6273 or jhunt@dnronline.com