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"I believe that the likelihood of the restaurants succeeding in the future after the losses they have experienced this year is, at best, remote," Isabella stated in the court filings.

Top Chef Star Mike Isabella to Close Nearly All Restaurants

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The restaurant group filed for Chapter 7 bankruptcy on Wednesday.
By Rachel Taylor December 2018 Legal

Only three months after filing for Chapter 11 bankruptcy, Washington D.C.-based chef Mike Isabella announced he will be shutting down his entire company, Mike Isabella Concepts. The restaurant group filed for Chapter 7 bankruptcy December 12, which means it will cease operations and liquidate assets to pay its debts. As of December 27, almost all Mike Isabella Concept restaurants will shutter.

“Under the present circumstances, I am facing the sad realization that I no longer believe that any restaurant associated with my name can recover from the negative press that has enveloped me for nearly the entirety of 2018,” Isabella said in a December 13 filing in U.S. Bankruptcy Court. “Despite my efforts to move on from the past and focus on restructuring my businesses, I believe that the likelihood of the restaurants succeeding in the future after the losses they have experienced this year is, at best, remote. And, quite frankly, without a significant cash infusion, the debtors simply do not have enough cash to continue operating.”

Isabella’s initial filing in September was supposed to help restructure the company, but the financial damage was already done. Washingtonian reports that none of the restaurants still operating in the group—Kapnos, G, Arroz, Pepita, Yona, and Kapnos Taverna—have the money to pay any rent for December. Already shuttered restaurants—Kapnos Taverna College Park, Requin Brasserie in Mosaic District, and Isabella Eatery—were also included in the filing. Two of Isabella’s restaurants—Kapnos Kouzina in Bethesda and Requin at the Wharf—were left out of the filings.

Mike Isabella Concepts was once a $30 million empire comprised of more than a dozen restaurants, multiple stands at Nationals Park in Washington, D.C., and a 41,000-square-foot food hall at Tyson Galleria, which opened exactly one year and one day ago. Financial troubles for the restaurant group began last year when a sexual harassment lawsuit was filed against the Top Chef alum. The lawsuit outlined rampant sexual harassment that existed in the restaurant group.

According to The Washington Post, the suit, filed in D.C. Superior Court on the case of Chloe Caras, a former regional manager for Mike Isabella Concepts, “had an almost immediate effect on sales and led directly to the Washington Nationals cutting ties with the chef.” It also soured media coverage, including an outright ban on all of his concepts on Eater lists and maps.

Isabella, his partners, and their attorneys said at the time, “Simply put, the allegations of an unwelcoming or hostile work atmosphere are false. Harassment, discrimination, bullying, abuse, or unequal treatment of any kind whatsoever are not tolerated at MIC,” and that the company hired a dedicated human resources director in 2017 and made other policy changes long before Caras threatened to bring her lawsuit. Financial terms of the suit’s May settlement were confidential.

The lawsuit was a catalyst for an already struggling restaurant concept. Isabella’s overly ambitious $40 million nine-concept food hall, Isabella Eatery, shuttered less than nine months after opening. The closures continued with Requin Brasserie in Northern Virginia, as well as two locations of Graffiato.

Per an article in The Washington Post, an employee added: “After the whole sexual harassment [lawsuit] thing, things started slowly going down. Since then, no one wanted to be associated with Mike Isabella, whether [the accusations] were true or not.”

In a sit-down interview with the publication at the time, Isabella said he hoped the bankruptcy filing would help the company avoid future closures. “The bankruptcy is a tool for me to basically restructure my finances and have an opportunity for a fresh start,” he said.

Washingtonian reported in November that Isabella’s partners Nick and George Pagonis, who were also named in the sexual harassment lawsuit, hoped George would take over the company. After the Chapter 11 filing, Demetry Pikrallidas, a lawyer for the brothers, said, “Negotiations are ongoing and I believe a clearer picture will emerge shortly after the first of the year. Despite the legal developments, Nick and George Pagonis continue to work hard to provide their clientele a first rate dining experience. I am working very hard to insure this will continue in the DC Metropolitan Area for years to come.”

Pikrallidas told The Post Thursday, “They are uniquely positioned and experienced to take over one or more of the restaurants. That’s going to happen one way or another.”

Isabella blamed the press for continually pushing a negative narrative about the lawsuit, initial bankruptcy filing and further restaurant closures. The court documents mentioned stories from The Washington Post, Eater, and Washingtonian that document Isabella’s fall.

“Notwithstanding Mike Isabella’s public apology and best efforts to implement a zero-tolerance policy … the press continued to incessantly report on Mike Isabella’s failures as a chef and business man,” the court documents say.

Restaurateur Hilda Staples, who was a partner with Isabella at Graffiato said, “I think the bigger picture is, and I’ve read it in other places, is that he grew too big without real money behind it. It’s the money, it’s not about the press.”