The best thing going for Eva Longoria’s Beso restaurant in Las Vegas is the “Desperate Housewives” actress herself.
That was shown Friday when details were disclosed on plans by a subsidiary of Landry’s Restaurants of Houston to buy the Beso LLC assets out of bankruptcy for $1 million.
A sales plan filed in U.S. Bankruptcy Court for Nevada says Beso’s landlord and Landry’s are conditioning the asset purchase on Longoria’s continued involvement with the Beso Restaurant and Eve Nightclub business — and that she’ll be contractually obligated to make appearances there.
The sales plan says a Landry’s subsidiary will be the 100 percent owner and manager of the restaurant and nightclub business. But Longoria will hold a 30 percent stake in a newly-formed entity “that will have the right to use the Beso assets,” the sales motion filed in court says.
Landry’s will hold 50 percent of this entity and — at the insistence of Longoria — Beso investor Jonas Lowrance will hold the other 20 percent.
In addition, Landry’s will indemnify Longoria for legal troubles arising from her involvement with the business, including covering up to $500,000 in her legal fees in pending lawsuits pitting Beso investors against each other.
An indemnification agreement signed by Longoria says that should Landry’s Beso subsidiary have to pay judgments or damages against Longoria, those payments could reduce her equity stake in the new entity — but in no event will her stake fall below 10 percent.
The deal doesn’t appear to be a windfall for Longoria. Records indicate she stands to lose most — if not all — of her $1.375 million investment in the bankrupt business that currently amounts to a 32 percent ownership stake.
With just $1 million to distribute to creditors from the proposed sale, landlord Crystals shopping center at CityCenter is scheduled to receive $300,000, the Nevada Department of Taxation will receive about $492,000 for unpaid sales taxes, and Beso’s bankruptcy attorneys will have a claim of about $100,000.
The key player in the arrangement is CityCenter, an MGM Resorts International hotel and casino development on the Las Vegas Strip.
With Beso behind in rent to the tune of $3.575 million, CityCenter for months has had the right to evict Beso and seize its tenant improvements.
But CityCenter has stood behind Beso and Longoria during the bankruptcy as they searched for investors to salvage the business — a search that culminated in Landry’s stepping in Aug. 8 to manage Beso and front up to $300,000 in cash to prevent its closure.
Disgruntled investors have complained the plan by Landry’s to take over Beso is a sweetheart deal for Longoria, though Bankruptcy Judge Mike Nakagawa has noted none of the complaining investors had proposed a plan of reorganization in which they would put up their own cash to keep the business afloat — and none has shown they can come up with $1.3 million of rent due Crystals since the bankruptcy.
And while the dissidents now have the opportunity to challenge the Landry’s purchase plan and offer more money for Beso prior to a Sept. 26 hearing, Landry’s clearly has the advantage in any potential bidding war as it’s backed by both Longoria and CityCenter.
In Friday court filings, attorneys for Beso said the Landry’s purchase offer is the best option to sustain the business, preserve some 50-60 jobs and provide some return for creditors.
“The debtor has not operated profitability in its Chapter 11 case to date and is anticipated to operate at a significant cumulative loss going forward,” Friday’s filing said. “Absent an immediate infusion of cash, the debtor will have to close the Beso restaurant. Without approval of the sale, the debtor will be facing an immediate liquidation of the assets of a closed restaurant.”
The filing said: “Landry’s expressed an interest in purchasing the debtor’s business on condition that a lease could be negotiated with the landlord and Eva Longoria would continue to be associated with the business. Those two conditions can be met.”
“The debtor attempted to market the business to other restaurant and nightclub operators. Landry’s was the one that showed interest and had been pre-approved by the debtor’s landlord,” the filing said.
“Landry’s has indicated that assurance of Eva Longoria’s continued involvement in the business is an element in its decision to make an offer to purchase the debtor’s assets. The landlord has indicated that assurance of Eva Longoria’s continued involvement in the business is an element in its decision to negotiate a new lease with the purchaser,” the filing said.
As for the marketing of the business to other potential buyers, a court declaration by William Braden, manager of Beso LLC, said parties contacted included the Light Group, Robert Earl and his Planet Hollywood company, the One Group, SBE, Maestro’s and other individuals who “for the most part turned out to be ‘promoters’ with no capacity to make any financial commitment.”
Beso LLC, which closed Eve nightclub this summer to save money, through July had lost $894,000 since filing for bankruptcy Jan. 6. The initial filing listed some $5.7 million in debt and liabilities. The property has struggled even after generating revenue of nearly $14.6 million in 2010.
Landry’s — which operates restaurant chains Rainforest Café, Landry’s Seafood House and Claim Jumper along with Golden Nugget casinos — has expressed confidence in turning the business around because of its management and marketing expertise as well as its pricing power with vendors.