The summer of 2017 has been a tough season for New Orleans restaurants. As many as 15 have closed throughout the area. Most closings seem to stem from an oversupply of restaurants, or just a lack of cash to make it through the slow summer months. But one closing particularly caught my eye.
No proper paperwork – no protection of the investment
The Advocate’s Ian McNulty reported on the closing of Altamura and ManhattanJack earlier this week. This seems to be a great example of an investor who is losing her investment because of a lack of proper paperwork.
The article claims that McKenzie Lovelace, a “local businesswoman and investor in Altamura” would receive an ownership interest in ManhattanJack if Altamura closed.
It appears that once Altamura started failing, Lovelace started looking at claiming her interest in ManhattanJack. But she didn’t find what she expected: “But when we got into the books, we found too many problems to keep it a viable business. We found that the business wasn’t being run properly. There were draws from its cash flow by the managing partner (i.e., Petronella) to pay for personal bills and expenses.”
Petronella attributes Lovelace’s statements as “sour grapes from an investor who lost money.”
This is a mess, but let’s recap some of the issues
- Lovelace claims to be an investor, but isn’t listed with the Louisiana Secretary of State. The business is also not in good standing.
- Whatever investor agreement is in place didn’t protect Lovelace’s investment. She claims that the books were a mess, but why didn’t she know that months ago? Did she?
- If ManhattanJack was the backup plan, why was Petronella allowed to move funds from one business to support the other. Lovelace calls it mismanagement, and Petronella says he was just “paying himself back.” That’s a huge point of disagreement, and should be addressed in the paperwork.
- Petronella claims that mismanagement wasn’t the reason why Altamura closed. Instead, he blames it all on Coleman Jernigan , who was “in charge of finances at ManhattanJack.” So now there’s a third party to potentially blame for this mess.
The epic failure of both of these businesses are what we specialize in preventing
With the proper paperwork and agreements in place, the owners could have spotted problems before it was too late. They may have been able to save at least ManhattanJacks. But now, both businesses are closed, and Lovelace’s chance at recovering her investment are probably slim, even if the loss of the investment was indeed mismanagement.
So, who is responsible?
The three partners, Lovelace, Jernigcan, and Petronella all seem to blame each other, but don’t want to take on the blame themselves. So who do we blame? They’re all equally responsible.
They failed to properly document the transaction, and now they’re stuck pointing fingers at each other, rather than working together to create a successful business.
On top of that, several employees claim to have not received paychecks. Tack on the potential employee wage claims and it’s even more of a nightmare.