Owners of the Golden Bear nightclub in Huntington Beach said this week, "We can get back to doing business" after having reached a settlement with an investor who sought to take over Orange County's oldest and best-known concert club.
Richard and Charles Babiracki, who bought the Golden Bear in 1974 and have booked acts such as Huey Lewis & the News, B.B. King, Steve Martin, X, Lone Justice and hundreds of others, have agreed to repay $52,500 (plus attorneys' fees of about $10,000) to Gerald Loadsman, an investor who loaned them the money in January to pay the financially troubled club's back taxes.
In return, Loadsman will make no further moves to acquire the club's stock, which was offered by the Babirackis as collateral for the loan. Loadsman also withdrew his request for the appointment of a U.S. trustee to oversee the operation of the club while continuing the bankruptcy proceedings that began in June, Loadsman's attorney Herbert Davis said. In addition, Loadsman's allegations that the Babirackis had mismanaged the club are "in suspension," Davis added.
The dispute with Loadsman "was diverting us from trying to do good business and being attentive to the club," said Richard Babiracki, president of Westcoast Folk Clubs Inc., the corporation name under which the Golden Bear operates. "It was a thorn in our side and now that the thorn is gone we can get back to doing business."
Added Robert Kinkle, the Babirackis attorney, "Everyone realized that something had to be done for the best interests of all estates. The litigation was detracting from the purpose of the Chapter 11 action."
In June, the Babirackis filed for protection and reorganization under Chapter 11 of the U.S. Bankruptcy Code, citing general economic conditions and increased competition as reasons for the club's debts of more than $200,000.
Loadsman, however, charged that the Babirackis mismanaged the Golden Bear, which has remained open since the bankruptcy filing, and requested that a U.S. trustee supervise the club's financial dealings.
"Any negative allegations about mismanagement were made by Mr. Loadsman's side in his attempt to get control of the club and sway the court in that direction," Richard Babiracki said. "We maintained from the beginning that those allegations were incorrect."
The Babirackis and Loadsman also filed civil suits against one another in the dispute over their loan agreement. The settlement, which Kinkle said was to be submitted this week to a bankruptcy judge, Peter Elliott, for his signature, "provides for the dismissal of the underlying civil actions upon completion of the loan repayment. My clients have agreed to pay Mr. Loadsman his money back over a (six-month) period of time and Mr. Loadsman has agreed to hold any actions to recover stock or control of the club."
But Richard Babiracki said that Loadsman's allegations "didn't affect our (business) dealings at all. When the stories came out in the media, a couple of people called and asked how things were going and pledged their support. But no one's policy changed toward us.
"(Booking) agencies do not require deposits from us because they have been doing business with the Golden Bear for many, many years. That didn't change. The support on the part of the music industry was really heartening. It made us feel damn good."
IT'S A JUNGLE OUT THERE: The Golden Bear isn't the only Huntington Beach nightclub having tough times these days. The owner of Spatz in Huntington Harbour is taking his case to Orange County Superior Court to appeal restrictions placed on his club by the Huntington Beach Police Department.
Last week, the Huntington Beach City Council voted to uphold the Police Department's restrictions on Spatz, which has been the only Orange County outlet for hard-core bands such as the Vandals, the Dickies and others.
Denying an appeal by club owner Jacob Rivchin (whom local musicians and club regulars know as Jack Richards), the City Council's vote means that Spatz must continue to have at least two security guards on duty during entertainment hours, which have been limited to the period from 8 p.m. to midnight.
The restrictions were imposed by the police in July in response to complaints from neighbors about noise and objectionable behavior from youths loitering in the club's parking lot.
"Between October, 1984, and July 8 we had a total of 69 police contacts," said Sgt. Jeff King of the police vice unit. ("Police contacts" include complaints or any other call for service.) "Since the conditions went into effect, we've had only four complaints and no arrests."
Rivchin's attorney, Alan May, said he will argue in papers to be filed next week that Rivchin's 5th Amendment rights were violated because the city did not give him "proper notice, a fair hearing and a chance to present his side" in attaching restrictions on Spatz's entertainment license in July.
"That is what the court will have to decide," Huntington Beach police legal adviser Bill Sage said.