Trask Radio - Case Summary
Business Description The Debtors, two New York limited liability companies, operate Balcon Salon, a bar located in the Hell’s Kitchen neighborhood of New Yor...
Business Description
The Debtors, two New York limited liability companies, operate Balcon Salon, a bar located in the Hell’s Kitchen neighborhood of New York City. Balcon Salon is described as a pillar of the local gay community.
- The business operates from a property at 674 9th Avenue, New York, NY (the “Hell’s Kitchen Property”), which is owned by Debtor Trask Radio, LLC and leased to Debtor Advanced Aerospace LLC, dba Balcon Salon.
Both Debtor entities are indirectly owned 51% by Eric L. Einstein and 49% by Justin Buchanan. In 2024, Balcon Salon generated approximately $1.5 million in revenue.
Corporate History
In May 2021, Balcon Salon entered into a 15-year lease for the Hell’s Kitchen property with its then-owner, Premier 674 Ninth, LLC. After taking possession in March 2022, the Debtors identified significant structural issues that required immediate, high-cost remediation, which in turn made their original buildout plan substantially more expensive than expected.
- To obtain lower-cost financing for the enlarged construction scope, the Debtors—acting on Spring Bank’s recommendation—shifted away from pursuing a construction loan and instead pursued a structure under which they would purchase the property and finance the acquisition and improvements through the U.S. Small Business Administration’s (“SBA”) 504 program together with bank financing.
- In August 2022, Debtor Trask entered into an agreement to purchase the Hell’s Kitchen property from Premier for $7 million, relying on initial lending commitments that were subsequently withdrawn.
Prepetition Obligations
As of the Petition Date, the Debtors’ funded debt obligations total approximately $12.1 million. The prepetition capital structure is summarized below:
Secured Debt
- Newtek Loan: Approximately $7.1 million is outstanding under a loan agreement dated March 23, 2023, with Newtek Business Services Holdco 6, Inc. (“Newtek”).
- The loan is secured by a first-priority mortgage on the Hell’s Kitchen Property and a security interest in the Debtors’ personal property.
- Repayment is guaranteed by several non-debtor affiliates (Tito Rocks LLC, Physical Onion LLC, Rainbow Starship LLC, and Pieces Bar LLC) as well as the Debtors’ principals, Messrs. Einstein and Buchanan.
- BIC Loan: Approximately $4.9 million is outstanding under a loan agreement from July 2024 with the Business Initiative Corporation of New York (“BIC”).
- The loan is secured by a second-priority mortgage on the Hell’s Kitchen Property and a second-priority security interest in the Debtors’ personal property.
- The loan is guaranteed by Tito Rocks LLC and Messrs. Einstein and Buchanan. All rights under the loan documents have been assigned to the SBA.
Unsecured Debt
- The Debtors report approximately $10,000 in consolidated trade debt.
Events Leading to Bankruptcy
Property Acquisition and Financing Collapse
The Debtors’ financial distress began in March 2022 after discovering significant, unanticipated structural damage at the Hell’s Kitchen Property, which dramatically increased renovation costs. This led to a strategic decision to purchase the property for $7 million to access more favorable financing through the SBA 504 program. However, in September 2022, after the purchase agreement was signed, the Debtors’ lender, Spring Bank, abruptly withdrew its financing commitment when its syndicate partners backed out.
High-Cost Bridge Financing and Construction Delays
Facing the collapse of their primary financing, the Debtors secured two high-cost bridge loans from Newtek in March 2023 to close on the property purchase and fund construction. The loans, totaling approximately $12 million, carried a floating interest rate of 11.5% and were intended to be short-term, lasting only nine months.
- Due to poor performance by the general contractor, the construction project suffered numerous delays, pushing Balcon Salon’s opening to October 2023.
- These delays forced the Debtors to obtain a costly extension on the high-interest bridge loans, further straining their resources. The permanent, lower-rate financing was not finalized until mid-2024, subjecting the Debtors to higher interest payments for several months longer than planned.
Operational Headwinds and Liquidity Crisis
The Debtors’ financial challenges were compounded by approximately $3 million in total cost overruns from construction and unanticipated loan servicing costs. When the permanent loans were finalized in 2024, the required payments were significantly higher than originally forecast due to the prevailing interest rate environment.
- Compounding these issues, a general decline in alcohol consumption beginning in 2022 led to Balcon Salon’s revenue falling substantially below projections following its opening.
- To address liquidity shortfalls, the Debtors’ principals injected over $2.1 million in personal loans and deferred their own compensation from July 2024 to March 2025.
Failed Negotiations and Foreclosure Action
By December 2024, it became clear the Debtors could not continue to service their debt. They approached Newtek to negotiate a resolution, but all settlement proposals were rejected without a counteroffer. In response to payment defaults, Newtek commenced a foreclosure action in New York Supreme Court on July 16, 2025, and filed a motion to appoint a temporary receiver on October 8, 2025.
- After further attempts to negotiate a forbearance agreement failed, the Debtors determined they lacked the financial resources to fight the foreclosure action.
- To preserve the value of their assets and halt the appointment of a receiver, the Debtors filed for Chapter 11 protection on October 31, 2025.