Bombay Palace Restaurants was a once-thriving chain that operated locations under the Beefsteak Charlie’s, Zona Rosa and Bombay Palace names. The company filed for bankruptcy in 1989 after being rocked by lawsuits, restaurant closings, and tax problems.
In September 1987, Sant Chatwal, founder and chairman of Bombay Palace Restaurants, agreed to pay nearly 1 million shares of the company for 49 underperforming units of Beefsteak Charlie's, a family steak and burger operation. Within 2 years, about 15 Beefsteak Charlie's restaurants had either been shuttered or sold. "Basically, the management at Bombay was sold a bag of goods that turned out to be filled with worms," said Roger Lipton, who tracks the industry for the New York-based firm Ladenburg Thalman & Co. "It didn't incur a lot of debt with the merger, but it poured in more capital than it could afford to right the ship."
Chatwal also agreed to a $400,000 annual salary contract with Larry Ellman, the incumbent president of Lifestyle Restaurants (the former operator of Beefsteak Charlie’s), which allowed him to remain in his capacity following the merger. However, the partnership between Ellman and Chatwal quickly soured when it was discovered that Lifestyle had neglected to file a 1986 federal income tax return (I guess Bombay wasn’t too big on performing any due diligence before the merger) and, in addition, was liable for about $300,000 in back real estate taxes. Chatwal subsequently became embroiled in a protracted legal fight with Ellman to negate the salary contract.
Adding to Bombay's financial strife was the decision of its accounting firm, Peat Marwick & Main, to drop the restaurant company from its client list in mid-1988. The New York-based accountant cited "false and inaccurate restaurant invoices" were submitted for restaurant renovations. "It seems to be a loosely structured operation," said Vin McCann, vice president of operations for the New York-based Riese Organization, which runs two of Beefsteak Charlie's 20 franchised units. "It was similar to a revolving door. Every time we'd deal with a franchise representative, it would be somebody different," McCann said.
Phil Kogge, a Charlotte, N.C., developer, had doled out $12,500 in April to open a Beefsteak Charlie's franchise. "They approached me about becoming the area developer throughout the Carolinas," Kogge said. "But there was no communication between the company and me. I tried to sever the relationship, but they never returned one phone call. Now it looks as if I'm just one person on a long list of creditors."Certificate:
Common Stock, issued in the 1980’sPrinter: American Bank Note Company Dimensions:
8” (h) x 12” (w)State: DE-Delaware Subject Matter: Restaurants and Fast Food Vignette Topic(s): Company Logo Featured
| Stylized Modern Condition:
Vertical fold lines, punch hole and machine cancels in signature areas and body, and stray staple holes and markings.