The historic bar and restaurant at 674 Ellicott St. is expected to shut its doors for good immediately, after U.S. Bankruptcy Court Chief Judge Carl L. Bucki on Tuesday afternoon signed an order converting the bankruptcy case from reorganization to liquidation.
Robert B. Gleichenhaus, attorney for tavern owner Jim Daley Jr., said they’re “looking to avert” the closing and “have a couple of plans in the works,” but didn’t want to discuss them publicly. Daley could not be reached to comment.
Back taxes and other debts doomed the iconic establishment, which was briefly shuttered by the state a year ago before it reopened after just a month. Daley had filed for Chapter 11 bankruptcy in August 2012, seeking to stave off more trouble and pay back what he owed.
At the time of the filing, the business owed $205,000 in state taxes and $65,000 in federal taxes, but a 2011 tax return showed it losing $20,432 that year, while a profit-and-loss sheet through May 20, 2012, showed a $7,537 deficit.
Daley sought out business and financial advice, and vowed to tighten the belt. But his effort fell short, as he was unable even to keep up with the quarterly fees and other obligations under bankruptcy protection, let alone pay his prior debts. The court also noted in October 2012 that it was unable to appoint a committee of unsecured creditors, a common step in bankruptcy to bring parties together to reach a resolution.
U.S. Trustee Tracy Hope Davis and Assistant Trustee Joseph W. Allen, who administer the bankruptcy case for the court, called for the conversion over the objection of Daley and his attorneys, Gleichenhaus and Michael A. Weishaar.
According to their motion, Ulrich’s continued to suffer losses and a “diminution of the estate” since entering bankruptcy protection. The motion cited a net loss through July of $5,468.13, and said the business had accrued additional unpaid withholding taxes, sales taxes and other administrative claims even after it filed for bankruptcy.
The combination of new losses and unpaid taxes means “the debtor has no reasonable likelihood of rehabilitation,” the motion said. The state and Internal Revenue Service even filed objections to Ulrich’s small-business plan, citing unpaid federal taxes of $12,144.42 and unpaid state taxes of $10,169.39 – all since the bankruptcy filing.
Finally, the restaurant hasn’t paid the quarterly fees to the U.S. trustee, totaling $1,950 so far and counting.
“The debtor’s small-business plan appears not to be feasible,” the motion said. “The debtor has failed to demonstrate that the business has been successfully reorganized to facilitate the proposed repayment plan.”
Gleichenhaus said he and Weishaar were not surprised by the trustee’s motion, since “it’s their job to keep things moving along.” Even so, “They are reasonable, and given certain things that might happen, there might be hope for reconsideration,” he added, noting that both Davis and Bucki are sympathetic to community issues.
The attorneys also argued that Ulrich’s had struggled more lately because of the construction activity on the medical campus that has disrupted business.
“We’re hoping for the best,” Gleichenhaus said. “We truly believe in the Bankruptcy Court and the U.S. trustee as reasonable, sympathetic and community-spirited, and Ulrich’s is a community-spirited project. It’s more than just any business. It has an important place in the community, and the Bankruptcy Court is often cognizant of that. The court does have its fingers on the pulse of what matters in the community.”
Considered the oldest continually operating saloon in Buffalo, Ulrich’s was founded in 1868 by Fredrick Schrerier, a German immigrant who opened a grocery store and saloon at Ellicott and Virginia streets, in what was then a popular German neighborhood and the center of the local brewing industry. Five major breweries were located within a few blocks. The grocery was dropped 20 years later, and a hotel was added upstairs to comply with an 1896 state law.
The bar and restaurant gained its current name in 1906, when another German immigrant, Mike Ulrich, took over. Ulrich had served potato pancakes to President Grover Cleveland at the Niagara Hotel in 1893 and gained a reputation. His restaurant soon became a political and social center of not only the German community but also the political establishment in Buffalo, and held sway for more than 40 years.
After Ulrich sold it, the restaurant changed hands twice from 1946 to 1954, when Jim and Erika Daley bought it. Their son, Jim Daley Jr., has run it with his wife, Mimi, since 2000.