Just days after French posted bond for forgery and writing a bad check, several of the troubled developer’s properties are headed into foreclosure. Paragon Commercial Bank will auction several properties French defaulted on next week.
Among those foreclosed properties is 2043-2045 W. Broad St., home of The Empress, a restaurant that opened in April and is trying to find a way to stay in the space.
“To be honest, we’re pretty terrified,” said owner Melissa Barlow. “We’re kind of afraid that come Tuesday we’re going to lose our building.”
Barlow said that she and the restaurant’s chef, Carly Herring, are hastily working to gather the money to make a bid for the space at the courthouse auction. Herring’s parents are trying to help, but Barlow isn’t sure how much it will take.
“I’m a little nervous some big contractor could come down there and outbid us,” Barlow said. “We’re doing well. We’ve had some good reviews. But we’ve only been open five months. The chef and I, who own it, don’t make anything.”
Paragon’s lawyer, Tom Ebel of Sands Anderson, said the bank has foreclosed and put out legal notices on properties owned by four of French’s entities: 2039-2041 and 2047-2049 W. Broad St., owned by 2039-2041 West Broad Street LLC; 2043-2045 W. Broad St., owned by West Broad Street LLC; 1500 Roseneath Road and 3313 West Leigh St., owned by 1500 Roseneath Road LLC; and 1601 Roseneath Road, also known as 1600 Mactavish Ave., owned by Roseneath Development LLC
“The loans that [French] has with Paragon are in default,” said Ebel. “The bank is protecting its interests by pursuing the rights and remedies, which includes foreclosures.”
The properties have a combined value of $3.8 million, according to the latest city assessments. According to the deeds on record, French owes at least $6 million to Paragon for those properties.
The Roseneath Road properties and Empress’s space are currently generating income, Ebel said. The property at 2039-2041 Broad is a parking lot, and 2047-2049 Broad is an unfinished apartment rehab that had been under construction but is now stalled.
It didn’t take long after moving in for The Empress to get dragged into the chaos. Upon opening, Barlow said, the restaurant paid its rent to one of French’s LLCs, in this case 2039 to 2049 W. Broad St. LLC. But things changed as French’s financial situation began to spiral downward.
The rent had to start being paid to the bank and about six or seven weeks ago, Barlow said: “When [French] knew the bank was going to start foreclosing on other properties, he gave us the option of purchasing it from him.”
That process ended when French was arrested, Barlow said.
Barlow said Paragon has told her they don’t want to continue to be a landlord and that even if they can raise the 10 percent down payment that is required at auction, the entirety of French’s defaulted loan will have to be paid off within 10 days.
In addition to preserving the day-to-day business, Barlow and Herring have put money into replacing the restaurant’s ceiling, pulling up the carpet and painting.
“Carly and I put everything we had in savings into this,” Barlow said. “We have everything to lose.”
Despite the trouble, Barlow has mixed feelings about French.
“I’m torn with my opinion of him,” Barlow said. “I might have my opinions about his business dealings. But as far as personally with us, he was quite gracious.”
Barlow and her partners aren’t the only ones with a lot to lose.
Several contractors have liens on the unfinished apartments including Green Air Inc., ANW Engineering, Davis & Green Inc., Crittenden Dry Wall, C&H2 Inc and L&W Supply Corporation. All told, liens on that property are more than $230,000. In the event of a foreclosure, it is possible that they might not get paid at all.
“I don’t know what will happen,” said Nathan Roady of Green Air. “It’s all up to the lawyers at this point.”
Michael Schwartz is a BizSense reporter. Please send news tips to Michael@richmondbizsense.com.