Mike Isabella‘s empire is nearly finished, following a Chapter 7 bankruptcy filing last week. The bulk of his remaining restaurants will close by Dec. 27, less than a year after a sexual harassment lawsuit rocked the company. Eater reports that Arroz, Kapnos Taverna in Arlington, Pepita, and Yona have already shuttered.
But two restaurants—Kapnos Kouzina in Bethesda and Requin at the Wharf—were excluded from the bankruptcy filing. Isabella’s team says “we don’t know how long they can last,” and the latest legal filings hint that it may not be long.
Requin’s landlord filed an eviction lawsuit in the landlord and tenant branch of DC Superior Court last Friday, claiming $144,555 in unpaid rent and other fees from May 1 through the end of 2018. Meanwhile, Santana Row—an affiliate of Kapnos Kouzina’s landlord with an 80-percent stake in the business—filed a motion in US Bankruptcy Court on Monday to remove Isabella as a manager. The company wants to operate the restaurant without him—at least temporarily.
The Chapter 7 bankruptcy filing means that Isabella would be required to cease all business operations, leaving Kapnos Kouzina without anyone to run it. Santana Row notes that this would have a “devastating effect,” and all employees would have to be terminated “even if the restaurant could operate profitably.”
To avoid this, Santana Row has asked the court to terminate or suspend Isabella, who has a 20-percent membership interest, as manager. In his place, the company wants bring in “another entity or person” to run Kapnos Kouzina through at least Feb. 15, 2019 while it analyzes whether the business is financially viable going forward. A lawyer for Santana Row declined to comment. Isabella, through a spokesperson, also declined to comment.
Santana Row claims that Isabella has kept it in the dark about much of the Kapnos Kouzina’s operations. The company says Isabella has failed to provide financial reports, despite multiple requests to inspect the books. As a result, Santana Row says it lacks sufficient information about the restaurant’s financial performance and viability. But there are some indications things aren’t going well: Kapnos Kouzina owes its landlord more than $80,000 in unpaid rent from October through December, and multiple vendors have sued for payment failures, according to the filing.
Meanwhile, Santana Row says it recently learned that Isabella has not been actively involved in the restaurant “for a substantial period of time.” The motion claims Isabella “improperly abdicated” his management responsibilities to his partners Nick and George Pagonis without informing or getting consent from Santana Row. While George oversees the kitchen, the Pagonis brothers don’t have a formal business relationship with Kapnos Kouzina, according to the filing.
A possibility remains that the Pagonises could swoop in to acquire one or more of the other Isabella restaurants, and reopen them under their own names. Their lawyer told Washingtonian, “Negotiations are ongoing and I believe a clearer picture will emerge shortly after the first of the year… I am working very hard to insure this will continue in the DC Metropolitan Area for years to come.” The Pagonis brothers have managed to keep a lower profile in the sexual harassment scandal, but they were also accused as part of it.
Despite everything going on, Isabella is apparently already plotting his comeback. On Instagram, he posted an image of a wolf baring its teeth with text reading, “The comeback is always greater than the setback.” His caption says: “Hard work and dedication gets you to the top, so you can never stop, no matter what is put in front of you. So excited for the next chapter!”