Sections

Bankruptcy may do what Prohibition couldn’t: Stop the beer from flowing at P.J. Hanley’s

The Brooklyn Paper
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Brooklyn’s oldest watering hole could go the way of the trolley car after it is sold at auction next month.

P.J. Hanley’s owner James McGown filed for corporate bankruptcy last week and plans to sell all of the historic Carroll Gardens bar’s assets including the business’s lease, equipment, and booze to the highest bidders on March 18.

McGown claims he has received several offers to purchase Hanley’s, some from entrepreneurs who hope to continue the pub’s 139-year run, and some from would-be buyers who would do what even Prohibition couldn’t and turn the Court Street storefront into a retail space that doesn’t serve beer.

“We’ve gotten a lot of offers to turn the place into something else,” said McGown, whose Chapter 11 bankruptcy filing states the business has $1,250,000 in assets and $450,000 in debt.

The bar now known as P.J. Hanley’s opened in 1874 as Ryan’s, and managed to survive Prohibition as a speakeasy with shuttered windows and escape routes. John Hanley bought the pub in the ’50s and ran it until he sold it to his nieces in 1995. They kept the bar going for nine years before the business to McGown in 2005, but holding onto the building.

McGown — who filed for bankruptcy last year for his pie chain South Brooklyn Pizza — listed multiple explanations for his bar’s financial woes in his bankruptcy filing, including thieving managers who allegedly gave too many free drinks to patrons, and disputes with his landlords over building repairs that escalated into court proceedings.

“The landlords are upset that I’m paying $6,000 a month here,” said McGown. “They know they can get much more than that, so they don’t want to acknowledge the lease.”

Deborah Hanley, one of the McGown’s landlords and a former P.J. Hanley’s owner who chose to sell when the pressures of raising small children made the day-to-day operations too much to handle, denies she has attempted to void the barman’s lease and says there is nothing she wants more than a bar in the space.

“He’s making a stink about something that’s totally fabricated,” said Hanley. “He has a lease that’s up in 2020, and there’s no way we can raise the rent. We’d love to get more rent for that space, because rents in the neighborhood are sky-high right now, but we can’t.”

Hanley said the lease stipulates that the tin ceilings and the antique bar itself cannot be removed or altered, but she acknowledges that the space could host a different kind of business, depending on who wins the auction.

If the space ceases to operate as a watering hole, she says she will be heartbroken.

“Hanley’s has been around forever. We’ve always had giant Saint Patty’s Day parties,” said Hanley. “It’s hard to see your name associated with something like bankruptcy. Hopefully, it will remain a bar.”

Neighbors, many of whom have frequented the neighborhood hangout for decades, agree.

“You always feel terrible when something that’s been around for so long goes away,” said Larry Love, who has been drinking at P.J. Hanley’s for more than 40 years. “It’s a part of the neighborho­od.”

Reach reporter Danielle Furfaro at dfurfaro@cnglocal.com or by calling (718) 260-2511. Follow her at twitter.com/DanielleFurfaro.

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Reader Feedback

FRANKIE DANK says:
Jim McGowan is a swindler and the neighborhood would want nothing more than to see him ousted.
March 1, 2013, 7:04 pm
SANTO says:
Jim McGowan is a slimeball that should not own property on a Monopoly Board.
March 1, 2013, 7:10 pm
SANTO says:
Jim McGowan is a slimeball that should not own property on a Monopoly Board
March 1, 2013, 7:11 pm
LARRY says:
Jim McGowan and Ruben are butt Pirates.
March 1, 2013, 7:16 pm
DANNY says:
Jim McGowan is a slum lord
March 1, 2013, 7:17 pm
BOBBY O. says:
Jim McGowan is an embezzler.
March 1, 2013, 7:19 pm
FRANKIES 257 says:
We are located down the street and we hear nothing but complaints about that place when people come join us for dinner. Jim McGowan is not a fan favorite on Court St to say the least. Kepp up the great work up the block , as we thank you for our success.
March 1, 2013, 7:22 pm
BIG MARY says:
I am sorr to hear this place is failing but glad I do not patronize the place anymore. The food was brutal and management sucks.
March 1, 2013, 7:25 pm
SUPER DAVE says:
McGown is an assclown that shouldn't own a McDonalds...I frequent the place and place is run like a joke..menu changes every week eliminating items that customers like. Hopefully right person takes it over and makes the money that place can with proper management
March 1, 2013, 11:11 pm
BROOKLYN RUGBY says:
Ruben needs to shower
March 5, 2013, 10:37 pm
Walter from Carroll says:
I don't care for anyone except for jack and my beat mate bud!
March 14, 2013, 2:15 pm
jim mcgown swindler says:
am a local resident that frequented PJ Hanley's for many years and read your article recently. I no longer patronize that establishment since this slime ball Jim McGown took the place over. The most recent news of it's bankruptcy was no shock based on his history of these types of business dealings that always go the wrong way to cover him swindling every nickel he can. I don't understand how this guy doesn't go to jail with his dealings since he arrived in Carroll Gardens in 2005. He made a purchase of properties on Douglass St. a few years ago from a person that was terminally ill entailing buying a share of two houses, which was done to set up the man's wife and children after his death. He stopped paying the mortgage that was a private deal and almost had the family in the street after the person died and was trying to get the children to sign their share over for pennies on the dollar knowing they were financially not secure without his monthly payments going to their mother. It was then discovered he forged documents on a purchase of a property on 4th Avenue after an elderly man passed away when the family came to claim what was theirs, he claimed he bought the property before the man died off him. He was running an illegal sex club out of his condo on Reade Street in Manhattan and the property was under his new born child to avoid legal sanctions. He was running an illegal hotel over his other bar called Cherry Tree on 4th Avenue and Bergen St. Now we have PJ Hanley's and this so called Public Auction March 18th that he discussed in your article. The word now is the auction has been canceled because he's claiming to have received a private sealed bid, which only means he's transferring the business to a close person to beat all the creditors he owes.How about you interview that slime ball again and see what story he comes up with now. Carroll Gardens could really do well without this trash walking the streets.
March 14, 2013, 8:11 pm
Jimmcgownswindler says:
Guess I didn't know half of what this guy had done.

PLEASE READ FROM
CRAIN'S

James McGown buys, bankrupts and bruises from Village to Brooklyn
By ADRIANNE PASQUARELLI
Mar 17, 2013 5:59 am

FUN WITH FILINGS: James McGown's many bankruptcy petitions are not the only reason he's raised neighbors' hackles. Photo credit: Village Voice
For nearly 140 years, P.J. Hanley's served beer to New Yorkers. In 2005, James McGown bought it. Late last month, Brooklyn's oldest bar went bankrupt.
The Chapter 11 filing was Mr. McGown's fourth separate bankruptcy petition in the past 12 months, and at least his sixth since 2009, in a recurring strategy the real estate developer, restaurateur and bar owner has used to keep his checkered collection of properties and retail businesses afloat.
Since 2008, he's faced at least $50,000 in fines for two buildings in disrepair, according to city records, and attracted repeated community complaints and lawsuits from residents in both Brooklyn and Manhattan. And to top things off, he's also been flagged for owning a TriBeCa basement condo that newspaper tabloids described as a "sex cave."
"People who have dealt with him know he's notorious," said Mikael Levin, an artist who bought his Gowanus, Brooklyn, residence from Mr. McGown in 2009 and now lives next door to two dilapidated McGown properties. "But he always seems to stay one step ahead."
In the world of small business, where community standing can mean everything, Mr. McGown seems to ruffle feathers wherever he goes. Online, anonymous tenant complaints include allegations of unreturned security deposits and deplorable building conditions. Businessmen with unpopular reputations are not particularly unusual, especially in a city as diverse as New York, but they can slow down, or even ruin, the process for the next would-be entrepreneur.
Soured relations
When Mr. McGown petitioned Brooklyn's Community Board 6 last year for a sidewalk permit for his two-year-old Brooklyn Buschenschank beer garden, his disregard for neighborhood concerns soured the proceedings. The request was denied. "We approve most of these things—this is a rarity," said Glenn Kelly, a member of the licensing committee of CB6, noting that the association has reacted poorly in the past when business owners have tried to circumvent the process. "But [Mr. McGown and his partner] were just so foolish."
Until last summer, Mr. McGown was most famous for a 2010 lawsuit alleging he and a tenant used a basement condo for raucous sex parties, angering the building's board. That case was settled. As both a landlord, primarily of residential properties, and a tenant for his commercial businesses, Mr. McGown has more recently come under fire for his string of Chapter 11 bankruptcy filings, racking up at least $14.4 million in unpaid debts.
About a decade into his real estate career, Mr. McGown diversified into hospitality with the purchase of P.J. Hanley's, according to affidavits submitted to New York state bankruptcy court.
Soon after, he bought Park Slope's Cherry Tree bar, which filed for bankruptcy after four years under his ownership. He also lasted two years as owner of a bar in Boston called the Bulfinch Yacht Club before it went under. In 2008, he expanded his empire even further with the opening of South Brooklyn Pizza, a chain that grew to five units.
Bankruptcy hasn't diminished his appetite for risk. Mr. McGown has spent the past eight years snapping up properties in foreclosure across the five boroughs. Bankruptcy court affidavits list him as the owner of at least 17 properties, including a dozen in the Bronx and a condo on Long Island. Yet his real estate corporate entities mentioned in those affidavits—Gowanus Inn Inc., East River Mortgage Corp. and 137 Beach Corp.—are all in bankruptcy. Another, 47-78 Douglass St., filed for Chapter 11 in 2009, and the case closed in January.
In August, Mr. McGown filed a Chapter 11 petition for South Brooklyn Pizza. He pleaded insolvency for P.J. Hanley's late last month; the bar stopped operating Sunday, St. Patrick's Day.
The court documents mention landlord-tenant disputes, which some bankruptcy experts consider a potential red flag, since Chapter 11 could be used as a strategy to avoid a rent increase on the space Mr. McGown leases. It's not abnormal for multiple entities to be controlled by the same person, but the arrangement raises the risk that funds from each are being commingled.
"It's definitely an area worthy of investigation [by the bankruptcy court]," said Warren Usatine, a partner at law firm Cole Schotz.
When reached by phone, Mr. McGown had no comment on his businesses, beyond a mention that an auction of P.J. Hanley's would occur at 11 a.m. on March 18. He said a sale of the pizza chain "could be next."
Jonathan Pasternak, the Del-Bello Donnellan Weingarten Wise & Wiederkehr attorney representing Mr. McGown in the P.J. Hanley's case, said his client was consenting to a dismissal of the bankruptcy petition. He had no comment on Mr. McGown's other petitions.
Mr. McGown's restaurant manager, Ruben Alban, said the bar will be rebranded and open again in a few weeks. "Operating a bar always has hiccups and community issues to deal with," he said. "It's a battle. You try to go with it." He added that the pizza chain is not for sale.
In a recent interview with The Brooklyn Paper, Mr. McGown blamed P.J. Hanley's landlord (Mr. McGown does not own the building where the bar is located) for wanting more in rent. One of the property owners, Deborah Hanley, a former P.J. Hanley's owner, declined to comment, though she told the local paper that such charges are untrue
Mr. McGown's other bars, the Cherry Tree and Buschenschank, remain open.
People who have had dealings with Mr. McGown describe a shrewd operator who cares only about winning and tries to get through litigation what he can't get through negotiation. He can be outrageous, too—for instance, showing up hours late for a meeting with potential buyers of his property.
Variations on a name
Mr. McGown's public persona can be murky: He has filed lawsuits and bankruptcy petitions under variations of his name—McGowan, for example—and is associated with several LLCs, including one called Brooklyn Entertainment, which is often listed as a creditor in his filings.
Carroll Gardens residents complain of the roaring noise from Court Street's Buschenschank—which, like most beer halls, keeps its windows open—and what they describe as Mr. McGown's refusal to even entertain a compromise. Similarly, he made few friends on the Lower East Side when, in seeking a liquor license for his pizza chain two years ago, he publicly labeled the area's community board "infamous."
Mr. McGown has also downplayed negative health-inspection grades for his eateries. For example, Buschenschank received a C rating in September, but a "Grade Pending" sign still hung in the window this month. The Department of Health and Mental Hygiene said the C grade should be posted.
Such behavior hasn't endeared Mr. McGown to his neighbors.
"He wasn't even conciliatory toward members of the community who wanted to talk to him about making it better," said Katia Kelly, a 28-year resident of Carroll Gardens who encountered Mr. McGown at a community board meeting last year. "It was clear that he had contempt for anyone who stood in his way."
There may be more at stake than neighborly relations. Some locals say Mr. McGown's practices are slowing retail growth in their areas.
His Gowanus properties at 555 Union St. and 557 Union St., for example, sit in blatant disrepair on a block where pricey shops are moving in. Mr. Levin, the artist who lives next door, said the buildings had been graffiti-covered eyesores for several years and often attract squatters and vagrants. The entrances were sealed up and the graffiti painted over earlier this year, Mr. Levin said, but he still fears the structures' peeling siding, which often flies into his garden and property.
"There are a lot of positive things happening all around us," he said. "But why doesn't anything happen there? It's a real drag on the block.
March 18, 2013, 9:25 am
RUBEN NEEDS A SHOWER says:
McGown is a pimp
March 21, 2013, 10:15 pm
Sam from Park Slope says:
As a former tenant of Jim McGown, aka Brooklyn Entertainment, I can attest to the fact that he is a evil slumlord. He ignored all requests for repairs and let the building fall apart. In my last month there, I was served foreclosure documents for over 6 of his properties in Park Slope. I had to sue him to get my security deposit and won. Needless to say, he never paid. He shuffles his assests from place to another to avoid bankruptcy.

How this man continues to get financing is baffling?
May 6, 2013, 1:41 pm

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