Advertisement

JUDGE ORDERS NEW LOOK AT GOLDEN BEAR’S BOOKS

Share
Times Staff Writer

Owners of the Golden Bear in Huntington Beach at least temporarily staved off a challenge to their ownership of Orange County’s oldest and best-known nightclub when a federal bankruptcy judge on Wednesday ordered a second look into the club’s business practices.

A key issue in the Golden Bear’s bankruptcy proceedings is the allegation by a major creditor that the club has been mismanaged by Richard and Charles Babiracki. The Babiracki brothers have owned the club since 1974, and during that time have brought numerous top rock, pop, jazz and country entertainers to Orange County audiences.

Gerald Loadsman, an investor who loaned the Babirackis $52,000 in January to pay federal taxes, made a bid to take control of the Golden Bear in a civil suit that seeks 100% of the stock in Westcoast Folk Clubs Inc., which runs the Golden Bear. The Babirackis offered the stock as collateral for the loan.

Advertisement

Loadsman’s suit is in state court pending the findings of an examiner appointed last month by U.S. Bankruptcy Judge Peter M. Elliott to look into the charges of mismanagement.

Although a report by the examiner presented Wednesday in bankruptcy court in Santa Ana contained allegations of sloppy accounting procedures by the Babirackis, the Golden Bear’s attorney argued that the report is insubstantial because it is based on a single visit to the club.

Attorney Robert Kinkle also claimed that the examiner’s representative did not witness the financial accounting that followed that rock concert he attended.

“We want someone to come into the office and take a look at how the accounting is handled, not just sit in the audience and listen to the music,” Kinkle said.

Elliott ordered the examiner to make a more thorough examination of the club’s accounting practices for his report to the court and continued the hearing until Sept. 26. The action was the latest development in bankruptcy proceedings that began in April when the Golden Bear’s owners filed for protection and reorganization under Chapter 11 of the U.S. Bankruptcy Code. At that time, the club’s owners cited debts of more than $200,000.

The examiner, Jon Stuhley, testified Wednesday that the all-cash nature of the nightclub’s operations make it difficult to determine whether there is any evidence of mismanagement.

Advertisement

After the hearing, Charles Babiracki, vice president and chief financial officer for Westcoast Folk Clubs, said he will cooperate completely with the examiner.

“That’s what I’ve always wanted,” he said. “It’s easy to make allegations. But if there’s anything wrong, I want them to find it. I’m just doing business the way I have for 11 years.”

In his initial report, Stuhley also cited evidence that the Babirackis had violated Alcohol and Beverage Control Department regulations by purchasing liquor for the Golden Bear from retailers. ABC laws require that businesses buy liquor only from wholesalers or distributors.

Kinkle confirmed in court that some liquor had been purchased at retail outlets but added that the practice had stopped.

“We are well on the way back to normal operating procedures,” he said.

Kinkle said that since the bankruptcy proceedings began, the club has been operating profitably.

In continuing the hearing, Elliott also postponed a decision on whether to assign a federal trustee to the premises to oversee the club’s financial proceedings, as requested by Herbert Davis, Loadsman’s attorney.

Advertisement

“There’s obviously a credibility gap here,” Davis said. “Since there is a lack of trust between the parties, we wanted a trustee in there to protect the creditors’ interests.”

Loadsman’s bid for control of the Golden Bear followed a civil action by the Babirackis alleging breach of contract. Both suits are in state court awaiting the outcome of the examiner’s report.

On Wednesday, Charles Babiracki confirmed that Panache, the Babirackis’ Long Beach nightclub-restaurant that has also been in financial trouble in recent months, closed earlier this month, but he added: “We hope to reopen in August.”

Panache, however, is not connected to Westcoast Folk Clubs and is run under a separate corporate entity, New Marina Enterprises, Babiracki said.

Advertisement