Bankruptcy at Marathon Grill; owners promise to stay open

Posted: October 13, 2013

Founders of the Marathon Grill restaurants, a chain that began as a 10-seat hamburger eatery in 1984, filed for bankruptcy restructuring Wednesday for their largest restaurant at 1818 Market St.

The breakfast, lunch, evening Happy Hour, and catering operation will operate "without interruption" during the Chapter 11 process, and "customers will not experience any changes in services or quality," owners Sheryl and Jay Borish said in a statement.

Two other Marathon restaurants, at 19th and Spruce Streets and 16th and Sansom Streets, were not part of the reorganization. Although operated by the same family, they are technically owned and operated by different legal entities, court documents said.

In the 2008 recession, Marathon, "like many businesses and restaurants, fell behind on its rent," according to papers filed in U.S. Bankruptcy Court in the Eastern District of Pennsylvania.

Initially, the landlord "cooperated with us" and the restaurant "paid a stipulated rent each month." In September 2012, the landlord waived 53 percent of the back rent and provided a schedule for payment, court papers said.

But, soon after, the ownership changed, and a promised written agreement outlining rent terms was never received, according to the bankruptcy filing.

"Last week the company learned that its landlord was not honoring the agreement it reached in fall 2012, but instead declared a default," the partnership that owns 1818 Market said in a statement. "This put the company in a precarious position."

The landlord's "threat to enter judgment and take possession of the lease premises" led the partners to reorganize under bankruptcy protection.

The company estimated it had "secured obligations" of about $2 million, and about $450,000 in "unsecured" debts.

The Borishes, who began 30 years ago with a 10-seat restaurant in Northeast Philadelphia, are majority shareholders with a 92 percent ownership interest. Their two sons each own 4 percent, court documents said.

"We still have the same drive and passion we did when it all began," Sheryl Borish said in court papers. "We take great pride in being part of Philadelphia's landscape and feel deeply rooted in our community."


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