Nashville’s world-famous music scene took a major hit after one of its iconic venues filed for bankruptcy last week.
Plaza Mariachi filed for Chapter 11 bankruptcy on July 1, while a fraud investigation into the owner continues and a bank attempts to auction the location.
First Republic Bank, which is still owed about $11 million in loans, foreclosed on the beloved Spanish-language shopping center on June 6.
The bank indicated it wanted to auction the property on July 2, but the company filed for bankruptcy a day earlier, halting the sale.
It comes after Plaza Mariachi owner Mahan Janbakhsh was indicted last month on bank fraud charges. Janbakhsh faces federal charges of forging assets.
Plaza Mariachi filed for Chapter 11 bankruptcy on July 1 after foreclosure
Plaza Mariachi Owner Mahan Janbakhsh Faces Federal Charges for Asset Forgery
“Mark Janbakhsh has pleaded his innocence and is vigorously defending himself against the charges,” a spokesman told DailyMail.com on Monday.
The venue is currently still open and offers the usual offering of music concerts, salsa nights, Mexican food and shops.
Janbakhsh emphasizes that Plaza Mariachi is not actually in financial trouble, but that it simply could not repay the loans in full because the terms expired earlier this summer.
A representative of the company told The Tennessean that the company had made monthly payments on the loans, but that it was unable to repay the $8 million principal balance at the end of the term.
“That is what caused the foreclosure and bankruptcy. We are confident that we will come out of this stronger,” Plaza Mariachi representative Randy Hinger said in a statement.
“We believe it is critical that the public understand that Plaza Mariachi was not behind on its loans. That is an important aspect of the foreclosure and subsequent Chapter 11 bankruptcy filing.”
The company will now seek to restructure its debts and assets under court supervision.
The sale has been temporarily halted for the next six days, David Anthony, an attorney for First Financial Bank, told The Tennessean on Tuesday.
The venue is currently still open and offers the usual line-up of music, shopping and dining
The company will now attempt to restructure its debts and assets under court supervision
If the company makes interest payments on its debt or files a court-approved reorganization plan, the freeze will likely remain in effect, Anthony added.
“If there is no voluntary dismissal, the automatic suspension will still be in effect in 60 days and there will be no execution,” Plaza Mariachi attorney Sean Wlodarczyk also confirmed to the publication.
“The idea behind this is that the bankruptcy law prevents an overly aggressive creditor from selling property to people or companies that are restructuring their debts through the bankruptcy process,” he explained.
Plaza Mariachi plans to sell “the properties surrounding Plaza Mariachi as part of a restructuring and remortgage transaction so that the company can continue to operate on attractive terms with another lender,” the company said in a statement Monday.