Last year he completed Chapter 7 bankruptcy, and although he retains his home in Centerville, Reif said the bankruptcy “stripped me of everything I had.”
LCNB approved the SBA loan in September 2009 when Reif’s business was already struggling, and he said he used the money to help cover his mortgage debt.
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Nine months later the bank sued Reif for the unpaid mortgage and the SBA loan. The SBA had already paid the interest on the loan to the bank and when Reif failed to repay the principal, SBA paid LCNB $35,000 to cover the federal guarantee on the loan.
LCNB President Steve Foster said he could not comment on the specifics of the loan. But Chief Lending Officer Matt Layer spoke generally about the type of SBA loan Reif obtained. It was an America’s Recovery Capital loan, part of nearly $1.5 billion allocated to SBA as part of the federal stimulus program to jump-start lending in the wake of the 2008 financial collapse.
Josef Reif, former owner of the l'Auberge restaurant in Kettering, discusses the financial troubles that led him to close the restaurant in February 2012 after defaulting on his mortgage and a Small Business Administration loan.
Credit: Ken-Yon Hardy
Credit: Ken-Yon Hardy
“The whole premise of that program is the whole United States was going through some pretty tough times and it was meant to stabilize the small businesses that were having a tough time,” said Layer, noting that of the four ARC loans LCNB awarded, only l’Auberge failed.
SBA Spokeswoman Emily Cain said that prior to loan approval the agency would have reviewed the l’Auberge loan because LCNB is not a preferred lender with automatic approval privileges. She said the loan was charged off on Sept. 9, 2011, to the U.S. Treasury, which was able to collect all but $18,745. Treasury halts collection efforts when a bankruptcy is filed.
Cain said the America’s Recovery Capital loan program — in place from February to September 2009 — was designed to help troubled businesses get some breathing room and hopefully survive. It could be used to pay debt like a mortgage, even to the lender who approved the SBA loan, as long as the loan was “designed to promote the borrower’s long-term viability.” SBA would have known Reif’s plans for the money before it was approved, she said.
Reif said he always thought he’d be able to pull through, even when customers did not return as usual in April 2010 after the slow winter months. “If somebody would have told me that this would happen I would say absolute no way,” said Reif. “I thought I was bullet proof.”
Sitting at a table in his home, Reif flipped through photographs of the l’Auberge heyday when presidents and other celebrities stopped by. “A lot of my ex-employees still call and say ‘boss, when are you ready to go again, we are waiting for you,’” said Reif. “That’s the old song. It always takes the green stuff.”
Reif knows it will be a challenge to find the “green stuff” to finance a new venture.“Hopefully I get lucky and find a second chance to continue,” he said. “I’m still looking around trying to find a little spot for a bistro with a nice bar to continue the tradition.”
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