The Shamrock Bar & Grill may not be opening in the near future after all.
Robert Mahr planned to open the redesigned tavern the first or second week of September, pending the city's approval of new alcohol (PDF) and entertainment (PDF) licenses. However, lawyers say a previous owner's estate holds the rights to the Shamrock Bar's lease, name and goodwill and are challenging Mahr's right to operate a new business inside the bar's current location.
The lawyers argue that Mahr's occupancy strips the estate of money that would be generated from the sale of the Shamrock.
'The bar was worth something, and it still is worth something," said attorney Richard King at the Aug. 21 meeting of the Alcohol License Review Committee (ALRC). King represents the estate of former Shamrock owner John J. O'Connell, who died in 2002. "You're being asked to give a liquor license to somebody who didn't pay anything for it, and where the estate has a judgment against it because it's owed money," King added.
Glenn Jahns officially purchased the Shamrock Bar from the O'Connell estate in 2005 for $523,580, which was to be paid in monthly installments over 20 years. Jahns subsequently struggled to pay city and state taxes and liquor vendor fees (PDF) and was unable to keep up with payments to the O'Connell estate. Court records confirm King filed a complaint over non-payments in April 2010 and two months later Dane County Circuit Judge Amy Smith ruled that Jahns owed the family the remaining $440,073 for the Shamrock’s purchase and $14,928 in late payment fees.
King said Jahns resumed payments to the O'Connell estate following the 2010 ruling but stopped a "few months ago.' The details are not publicly available, but O'Connell's sister, Sharon Newell, says in an interview with Isthmus that the family stopped receiving payments June 20.
The Madison Police Department shut down the Shamrock Bar June 30 after Jahns lost his sellers permit and alcohol license due to unpaid taxes. Jahns owes the Wisconsin Department of Revenue $28,166. Mahr has told Isthmus that Jahns is going through bankruptcy proceedings, but Jahns has not been able to be reached for comment.
Attorney Craig Stevenson, who also represents the O'Connell estate, told the ALRC that the estate has "zero" hope of collecting payment from Jahns so is now seeking an outside buyer.
"I don't know whether [the debt] will all get paid or not, but we'll try to find the next buyer who is interested in this and hopefully make something of it."
With 11 years experience working at the Shamrock Bar under his belt, Mahr told the ALRC he is confident in his ability to resurrect the tavern. He said he is doing it because he is dedicated to preserving the space for the downtown and LGBT communities.
"Basically, I've decided to try to save the Shamrock Bar," he said.
Lien on the lease
Larry Lichte owns the building where the Shamrock Bar is housed. He rented the property to John O'Connell in 1985 and then to Jahns in 2005. After the bar closed in June, Jahns terminated his lease, and Mahr began negotiating a new lease with Lichte, contingent on the city's approval of his alcohol and entertainment licenses.
Stevenson said if Mahr opens his business in the tavern's current location, the O'Connell estate will lose most of the Shamrock’s assets. He said about 64% of the bar's worth comes from its goodwill, which includes the Shamrock's name and loyal customer base.
Stevenson informed the license committee that Judge Smith in 2010 also put a lien on all of the tavern's assets and appointed a receiver to manage them. Stevenson noted the right to terminate the Shamrock's lease is one of those assets because it determines the business' resale value. Stevenson said Jahns did not have the right to terminate his lease after the Shamrock closed in June because the receiver held possession of those rights since 2010.
King says he is still working out the details over which assets belong to the O'Connell estate and what actions the estate can take to prevent Mahr from opening a business using the Shamrock's name and location. When asked whether the estate would take the matter to court, King said, "Once we're able to clarify what our interest is, we will do whatever is necessary to protect that interest."
If a court determines Jahn's lease has not been legally terminated, Mahr would be unable to open his business in the Shamrock's current location -- at least until Jahn's lease runs through its full term, expiring Dec. 31 2014. During that period, the O'Connell estate could, in theory, find another buyer.
But Lichte said he would not lease the building to any tenant other than Mahr, whatever the courts decide. Any effort on the receiver's part to sell Jahn's lease to a new tenant is "a dead end" because he has the power to decide who he will lease his property to, Lichte added.
"I've grown to know and respect [Mahr] and I know he is able to run that bar," he told the committee. "I want to know the people I'm renting to, not some receiver. I'm not going to rent to some receiver with no experience."
King and Stevenson were not the only critics of Mahr's plans at the ALRC.
Assistant City Attorney Jennifer Zilavy questioned Mahr's potential plan to install Jahns as his kitchen manager, wondering whether Mahr was a "straw party" for Jahn's continued involvement in Shamrock's operations "so [Jahns] could get out of his debt to the Department of Revenue."
Two community members submitted statements to the committee (PDF) objecting to Mahr's business, claiming Jahns would continue to make financial decisions. But Mahr said Jahns would not act in a financial capacity at the new bar.
Despite the concerns raised by the O'Connell estate and the city, the ALRC recommended approval of Mahr's licenses under the condition that, prior to the Madison Common Council meeting on Tuesday, Sep. 3, he provide proof to the city attorney that he is legally allowed to occupy the bar's premises. The council will decide whether to grant the licenses, which Ald. Mike Verveer says may be a formidable task.
"This might end up being the first ALRC item to get full discussion at a council meeting in a long time," he says.