Sale of Monroe’s imminent as Mott seeks to salvage value, report says

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The sale of Monroe’s, the upscale dining establishment on Monroe Avenue in Pittsford, is imminent as restauranteur Katherine Mott attempts to maximize the remaining value of her debt-laden hospitality portfolio, according to documents filed in federal court.

Court-appointed receiver Mark R. Kercher is advising the sale of Monroe’s, The Wintergarden by Monroe’s and Divinity Estate & Chapel. His January status report filed with the court on Thursday says the sale of all three is one of only two options that would preserve “a modicum of enterprise value.”

The other option, shuttering all operations, would “stop the bleeding” in terms of operational costs, he wrote, but that choice would provide “no opportunity to discharge the remaining sales tax and rent obligations.”

Kercher was retained last spring to oversee financial operations of Mott’s restaurants and event venue businesses following a lawsuit by Five Star Bank. The bank alleges that Mott and co-defendants used an elaborate check-kiting scheme to defraud the financial institution out of around $19 million.

That suit triggered an investigation by federal authorities, and in December led to a guilty plea in U.S. District Court by Mott on charges of financial institution fraud and money laundering. She faces up to 30 years in prison, a $1 million fine and responsibility for restitution when she is sentenced on May 1.

The plea agreement also included forfeiture of the Crescent Beach Restaurant property on Edgemere Drive in the town of Greece. Purchased in November of 2023 with the goal of reopening the once-famous restaurant by spring of 2024, renovation work on Crescent Beach shut down following the lawsuit by Five Star Bank.

In the interim, she has been liquidating assets at the direction of Kercher in order to pay creditors while keeping employees on the payroll at her facilities. She owns the businesses but not the properties, so there is limited asset value.

Sale of Monroe’s, at 3001 Monroe Ave., is expected to close on Friday, Kercher’s report states. An asset purchase agreement has been signed and the unidentified buyer has agreed to assume the delinquent sales tax debt of more than $100,000, as well as obligations for upcoming events under contract and gift card obligations.

When totaled, the obligations assumed in the purchase are more than the assessed value of the business, Kercher’s report states. Because the property owner has already issued a notice of lease default, there is no assurance the business can remain in operation long-term without an ownership transfer, so closing of the sale is paramount, he wrote.

Negotiations also are underway with an unidentified buyer for The Wintergarden, which operates on the ground floor of Legacy Tower at 1 Bausch & Lomb Place in the city of Rochester.

The deal being negotiated calls for the buyer to assume liability for the balance on a Small Business Administration loan, future events under contract, fees due to property owner Buckingham Properties and any sales tax debt.

Current employees who work events would be retained if the sale terms being discussed are accepted, according to Kercher’s report.

Because of the financial liabilities, a sale of The Wintergarden would provide no cash to pay down other debts.

Divinity Estate & Chapel, the wedding venue located at the former Colgate Rochester Crozer Divinity School, at 1100 S. Goodman St., has “little, if any, value” based on a discounted cash flow valuation model, Kercher’s report says.

Sales talks are underway, with the prospective buyer to assume obligations for scheduled events, unpaid rent and sales tax obligations.

Mott, 54, in late summer sold two rental properties to a family member, and in December sold her residence at 11 Wexford Glen in Pittsford for $450,000. Proceeds of the Wexford Glen sale were used to pay $175,000 in delinquent taxes and receivership costs incurred between July and November, as well as $140,000 in legal fees, Kercher’s report states.

The remaining balance was used to fund restaurant operations.

Excluding the infusion of $1.197 million in proceeds from real estate sales, the Mott entities incurred a loss of just over $1.2 million between April and December, Kercher’s report showed.

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