SCHENECTADY Cornell’s files Chapter 11 to stall foreclosure BY MICHAEL LAMENDOLA Gazette Reporter Reach Gazette reporter Michael Lamendola at 395-3114 or lamend@dailygazette.com.
The owner of Cornell’s Restaurant filed for Chapter 11 bankruptcy protection Friday to protect the Little Italy eatery from creditors, including foreclosure by American Tax Funding. JoAnn Aragosa, owner of 39-45 North Jay Street Corporation and Cornell’s, said the restaurant remains open. The corporation owns the land and building housing Cornell’s Restaurant. The Metroplex Development Authority owns the parking lot used by Cornell’s and other businesses in the area. Aragosa said business at the restaurant remains good, but that the corporation is behind in its taxes. The corporation’s tax delinquency amount was not immediately available, but at one time she owed nearly $1 million to various agencies. The Chapter 11 filing forestalls a foreclosure action begun this year by American Tax Funding, which handles tax liens for the city of Schenectady. “Business at the restaurant is outstanding. In fact, sales are up over 20 percent from last year,” Aragosa said. “We are taking this action due to tax liens and other debts. We are current with all of our suppliers and vendors, but we are behind on our taxes.” Metroplex Chairman Ray Gillen said a review of Cornell’s fi nancial reports, which Aragosa submits to the authority, indicates the “problem at Cornell’s is not on the revenue side. The restaurant is very busy and revenues continue to grow.” Gillen said the problem is tax liens and debts that date back nearly a decade to when Aragosa relocated her restaurant to North Jay Street. “The project simply has too much debt and was poorly structured. Chapter 11 appears to be the only viable option to allow the company to work out agreements with its creditors,” including Metroplex, he said. Aragosa owes Metroplex $224,000. Gillen said Metroplex retains possession of the parking lot and has a personal guarantee from the owner, “which it will pursue if necessary.” The family-owned restaurant was on Van Vranken Avenue for decades. At the urging of former city and economic development leaders in 2001, Aragosa agreed to relocate the restaurant to North Jay Street to help initiate the Little Italy Project there. Aragosa bought a building at 39 North Jay St., leaving a structure on Van Vranken she had rented since 1973. She said at the time of her relocation to North Jay Street that she needed to expand to accommodate more customers. At the time, Aragosa received a $100,000 loan from the city’s Economic Development Fund and a $100,000 loan from the now-defunct Schenectady Economic Development Corporation. She also received a $440,000 loan from the New York State Business Development Corporation. Her own investment was approximately $120,000. The business development corporation is a private agency that receives money from more than 160 New York state commercial banks and thrift institutions. It helps creditworthy small- and medium-sized business, especially minority- and women-owned businesses. In 2003, Metroplex, then under the chairmanship of John Manning and a different board, gave Cornell’s a $235,000 loan and a $235,000 grant to help pay relocation costs. “The current board had no role in this project,” Gillen said. In 2006, Cornell-Aragosa restructured the loans received from the New York State Business Development Corporation. At the time she also owed the state nearly $155,000 in withholding and sales taxes.
Metroplex Chairman Ray Gillen said a review of Cornell’s financial reports, which Aragosa submits to the authority, indicates the “problem at Cornell’s is not on the revenue side.
Why does the Metroplex review financial reports of private sector businesses? Is there a requirement that any business that accepts funding from the Metroplex disclose all of its financial records to the quasi-government public authority? If so, for what purpose and for what duration of time?
Stay tuned for the "Gillen/Savage" Bailout to Cornells! Its okay when other businesses go out of business but not Metroplex businesses. Taxes are an expense too, and it doesn't matter that they pay there other vendors. All businesses and residents pay taxes. If they don't everyone else must pick up the tab.
And your right Brad Metroplex's high paid executive staff is apparently reviewing their financials on taxpayer time.
Where was the bailout for Costello's now defunct on Nott Terrace? They always said Downtown business was great too. Then they closed. Schenectady County is the ONLY local county to see sales tax receipts fall this quarter compared to last quarter. Someone without Metrograft the other counties are seeing a minor rebound.
Quote of the week; "she needed to expand to accommodate more customers."
She did need to expand to accommodate more cusotmers. I think their customer base has continued to grow. You have a problem with metroplex looking at the books--I would have a problem with them if they didn't since they helped get them up and running. The more interesting question in all of this, is why step-son Pat Aragosa didn't intervene to keep them from this situation. Joanne is a good person who has devoted her life to that restaurant over the years even when the first husband screwed her up. Sorry I say help her.
They should have stayed right where they were on VanVranken. Many always thought it the move was a mistake and it appears to be just that.
Just because someone throws taxpayer money your way in the way of grants and loans does NOT constitute a good business move. They had/have a very successful business that didn't need to relocate. Like I said, many many people thought it was a mistake.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The most interesting part of this was the Times Union article which isn't posted here. If you look at there list of debtors owed versus what they initially borrowed, they have not paid anybody. They owe Metroplex, American Tax Lien, Schenectady County Economic Development, Schenectady Local Development, and New York Business Development all more than they originally borrowed except that loans that were zero percent they owe the original balance. So basically they haven't paid any portion of their mortgages, taxes, and sales tax, and owe more now then when they started.
How can you justify giving more loans or grants, if they haven't even paid anything? Where is all the money going?
Another Van Dyke fiasco. And TS is right. In 2006 they restructured loans received from NYS Dev Corp. How could they do that when they owned $155,000 in just State taxes?
Death Ray is attempting to distance himself by blaming the old Metrograft board. But what about the street paving, curbing, light posts, parking lots and idiotic pillars you put in and forced the broke City to contribute to?
The bottom line is even if they bail them out, they can't pay their bills. I wonder how the new Perreca's is affecting them? Business their is booming!
Perreca's opened their addition the right way without the Metrograft handouts. You can just slice the pie in so many smaller pieces. Especially when disposable income keeps falling.
Perreca's is now open for dinner and will do even better. The entire lot is packed with customers.
Cornell's owner to reorganize Restaurant will remain open for business during Chapter 11 filing
By ERIC ANDERSON BUSINESS EDITOR First published in print: Saturday, July 17, 2010
SCHENECTADY -- The owner of the Cornell's restaurant building and the land on which it sits in Schenectady filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Albany on Friday, with $1.083 million in assets and $1.062 million in debts. The restaurant, which relocated from Van Vranken Avenue in Schenectady to the city's Little Italy neighborhood on North Jay Street, is operated by JoAnn Aragosa, who also owns 39-45 North Jay Street Corp. It was 39-45 North Jay Street that sought protection from creditors while it reorganizes under Chapter 11.
Cornell's will remain open for lunch and dinner Tuesday through Sunday. The Schenectady Metroplex Development Corp., which is a creditor in the case, blamed the filing on the restaurant's heavy debt load.
"The restaurant is very busy and revenues continue to grow," the Metroplex statement said. "The problem is tax liens and debts which date back to the former Cornell's location and the way this project was put together back in 2003 by the now defunct Schenectady Economic Development Corp.
"The project simply has too much debt and was poorly structured," the Metroplex statement said. "Chapter 11 appears to be the only viable option to allow the company to work out agreements with its creditors, including Metroplex, which is owed $224,000."
Cornell's has a long history in Schenectady. In a review in the Times Union, William Dowd, writing in 2004 shortly after the restaurant relocated, recounted its founding by Nicholas and Pasqualina Cornell in 1943 as a neighborhood bar that grew into a restaurant. They sold it in 1977, but in 1997 the Cornells' daughter, JoAnn Cornell Aragosa, and her husband, accordion player Amerigo (Merf) Aragosa, got it back into the family.
Dowd reported only a couple of "mild annoyances" during his visit, and rated it three stars on a scale of one to four.
On Friday, JoAnn Aragosa said sales were up more than 20 percent from a year ago, and that the restaurant is current with its suppliers and vendors but behind on tax liens and other debts.
"Once you fall behind in property taxes in this city, catching up is very hard due to the very high interesst rates charged by the tax lien company," she said.
The restaurant's liabilities include $453,200 owed to New York Business Development Corp.; $75,000 owed to Schenectady Local Development Corp.; $100,000 to the Schenectady County Economic Development and Planning Department; the Metroplex debt; $115,850 owed to the city's tax lien company, American Tax Funding, for real property taxes from 2005 to 2008; and $46,407 in school and property taxes from 2009 through this month.
Perreca's isn't doing as well as you would think, They opened at night BECAUSE of Cornells. If Cornell goes under, Perreca will follow. Perecca's competition is not Cornell's but rather Civitello's.
If Perrecas ever went out of business, at least they won't be owing a quarter of a mil in loans and back taxes. Seriously, does any Metroplex loan require anything other than nepotism or a tie to the DEMs? I guess a business plans and credit rating are for real banks...not the Plex.
So what have they actually paid back in these last six years? It is just another failed attempt at revitalizing schenectady. Everyone knew that this 'little italy' thing was going to be a flop!
When ya got people pissing on sidewalks and puking at bus stops......yer not gonna get too many return customers! Cornells should have never moved and the plex should have never given them OUR tax dollars on a wim and a prayer!
The only way the plex can save face now is to BAIL THEM OUT with yet even more tax dollars.
Keep all of this information available. Suzie is going to make a run against Farley.....I'm sure her past record of supporting failed or failing businesses, with taxpayer's money will strengthen her campaign. NOT!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
Logged
Where was the bailout for Costello's now defunct on Nott Terrace? They always said Downtown business was great too. Then they closed. Schenectady County is the ONLY local county to see sales tax receipts fall this quarter compared to last quarter. Someone without Metrograft the other counties are seeing a minor rebound.
