Nashville’s world-famous music scene was dealt a major blow after one of its iconic venues filed for bankruptcy last week.
Plaza Mariachi filed for Chapter 11 bankruptcy on July 1, amid an ongoing fraud probe into its owner and an attempt by a bank to auction off the venue.
First Republic Bank, which is owed around $11 million in loans, foreclosed on the much-loved Hispanic venue and shopping center on June 6.
The bank said it was looking to auction off the property on July 2, however the day before the business filed for bankruptcy, placing a halt on the sale.
It comes after Plaza Mariachi owner Mahan Janbakhsh was indicted for bank fraud last month. Janbakhsh faces federal charges of falsifying assets.
Plaza Mariachi filed for Chapter 11 bankruptcy on July 1 following foreclosure
Plaza Mariachi owner Mahan Janbakhsh faces federal charges of falsifying assets
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‘Mark Janbakhsh has pleaded not guilty and is vigorously defending himself against the charges’ a representative told DailyMail.com on Monday.
The venue is currently still open offering its usual array of music concerts, salsa nights, Mexican cuisine and shopping.
Janbakhsh insists that the Plaza Mariachi is not actually in financial trouble but simply could not repay the entirety of its loans in full as its terms came to an end earlier in the summer.
A representative for the business told The Tennessean that the company had been meeting its monthly payments on the loans but could not repay the principal balance of $8 million at the end of the term.
‘That is what is causing the foreclosure and the Chapter 11, which we are confident that we will come out of in a stronger position,’ Plaza Mariachi representative Randy Hinger said in a statement.
‘We believe it is crucial for the public to understand that Plaza Mariachi was not behind on loan payments, which is a significant aspect of the foreclosure and subsequent Chapter 11 bankruptcy filing.’
The company will now attempt to restructure its debts and assets under court supervision.
The sale has been temporarily stopped for the next 6 days, David Anthony, an attorney representing First Financial Bank told The Tennessean on Tuesday.
The venue is currently still open offering its usual array of music, shopping and dining
The company will now attempt to restructure its debts and assets under court supervision
If the business makes interest payments on its debt or files a court-approved reorganization plan the stop will likely remain in place, Anthony added.
‘Absent something like a voluntary dismissal happening, in 60 days the automatic stay will still be in place, and no foreclosure will happen then either,’ Plaza Mariachi attorney Sean Wlodarczyk also confirmed to the publication.
‘The idea behind this is that the bankruptcy code keeps an overly aggressive creditor from being able to sell properties out from under people or businesses who are reorganizing their debt via the bankruptcy process,’ he explained.
The Plaza Mariachi plans to ‘sell the exterior properties surrounding Plaza Mariachi as part of a restructuring and new mortgage to continue operating under terms that are attractive from a different lender,’ the company said in a statement on Monday.