Waverly Diner in West Village Files for Bankruptcy Protection

By Jonathan Randles / Posted on April 15, 2018

The company behind Waverly Restaurant, a legendary diner in New York City’s West Village that serves classic American-style comfort food, has filed for bankruptcy protection.

Village Red Restaurant Corp., the diner’s corporate name, filed for chapter 11 protection on Friday in the U.S. Bankruptcy Court in New York. The restaurant is facing potential liability in two lawsuits alleging management didn’t pay overtime to a group of former waiters, dishwashers, busboys and delivery men.

Filing chapter 11 bankruptcy halts the litigation and allows Waverly Restaurant to keep its doors open as it attempts to address its liabilities. The restaurant’s bankruptcy petition estimates it has up to $50,000 in assets and between $500,000 and $1 million in liabilities.

“Yes, we do intend to remain open,” Stuart P. Gelberg, a bankruptcy lawyer who is representing Waverly Restaurant, said Monday.

Waverly Restaurant’s move into bankruptcy comes amid challenging times generally for New York diners, which have been squeezed by changing dining habits and rising rents. Restaurant founder Nick Serafis filed for personal bankruptcy protection in January, court records show. The diner is owned by his daughter, Christine Serafis, who received the restaurant as an inheritance gift, court papers say.

Court filings list as creditors former employees who have sued the business. The workers’ legal claims are disputed by the restaurant, according to the petition.

A federal judge last year determined Waverly Restaurant is liable to the employees for unpaid wages, court papers filed in the lawsuit. The court last month concluded a bench trial to determine damages against the diner.

The employees have estimated the amount of their potential damages for alleged violations of New York and federal labor law at more than $2.2 million, plus interest, according to a June court filing. Several of the employees had worked at the diner for a number of years, including plaintiff Valente Garcia who worked there from 1992 to 2015 as a waiter, host and counterman.

“The bankruptcy is a blatant attempt to avoid paying the back wages owed to the restaurant’s workers,” said Lou Pechman, a lawyer who is representing former Waverly Restaurant employees.

A lawyer who is defending Waverly Restaurant in the wage-and-hour litigation didn’t immediately return a message Monday seeking comment. Ms. Serafis wasn’t involved in hiring or pay decisions for any employees at the restaurant, according to papers filed by the company last year.

An initial hearing in the bankruptcy court has been scheduled for May 8.

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H/T: The Wall Street Journal