Facing debts of more than $200,000 and allegations of mismanagement, operators of Orange County's oldest and best-known concert club, the Golden Bear in Huntington Beach, have filed for protection and reorganization under Chapter 11 of the U.S. Bankruptcy Code.
In the 1960s, the Golden Bear presented such rock, folk and blues luminaries as Bob Dylan, Jimi Hendrix, Janis Joplin, Neil Young and Muddy Waters.
Richard and Charles Babiracki, the brothers who have owned the Golden Bear since 1974, blamed the club's financial troubles on "a series of factors, including a downturn in the economy and increased competiton from the Pacific Amphitheatre (in Costa Mesa), which has been draining off some of its clientele," the Babirackis' attorney, Robert Kinkle, said Monday.
"Since this is a Chapter 11 action, there are no plans to close and liquidate the business. We hope to bring the operation back on its feet and file reorganization plans," Kinkle said.
Westcoast Folk Clubs Inc., the corporation name under which the Golden Bear is run, is also the subject of a civil suit brought by a private investor who loaned the Babirackis $52,500 in January. The money was used to pay federal taxes and to prevent the Internal Revenue Service from closing the club.
Gerald Loadsman contends that the Babirackis failed to turn over 51% of the company's stock as part of the terms of the loan. In the suit, Loadsman is seeking 100% of the stock in Westcoast Folk Clubs that was placed as collateral for the loan, his attorney Herbert Davis said Monday.
"It is the hope of everybody that the Golden Bear will be able to pull out and continue to survive and function. No one is looking to close the club," Davis said. But he added that Loadsman would seek to install new management for the club.
The Babirackis dispute Loadsman's allegations, alleging that Loadsman breached their contract by failing to provide an additional $90,000 in loans, Kinkle said.
In declarations filed with the bankruptcy action, Loadsman alleges that the Babirackis misappropriated income and assets to start Panache, a nightclub and restaurant they opened in 1983. He further claims that they did not accurately report all income, that they falsified expenses and liabilities and engaged in acts in violation of the rules and regulations of the Department of Alcohol and Beverage Control.
In an accompanying declaration, Charles Babiracki denied all the charges, stating that he and Richard Babiracki refinanced their homes to raise capital for Panache.
A court examiner is scheduled to report his findings to the court on July 24 on allegations that the Babirackis have mismanaged the club's operation.
Chief among the Golden Bear's creditors listed is the IRS, which is owed more than $43,000. Documents filed since bankruptcy proceedings were opened in April in U.S. Bankruptcy Court in Santa Ana also reveal that the firm owes more than $16,000 to the state Board of Equalization and that the IRS seized the club's liquor license and the Board of Equalization has put a keeper on the premises.
No musical acts were listed among the club's creditors.
Under Chapter 11, Westcoast Folk Clubs will seek relief from its debts so that the officers can reorganize and institute a payment schedule for its creditors. In that event, the club would remain open for business.
After the Babirackis bought the club in 1974, the Golden Bear continued to bring top performers to Orange County, including Huey Lewis & the News, B.B. King,Steve Martin, Peter Gabriel, the Nitty Gritty Dirt Band, the Motels, Lone Justice, the Blasters, Leo Kottke and Emmylou Harris.