Merrimack Valley

Former Lawrence restaurant, mill site plagued by financial woes

By Bill Kirk
bkirk@eagletribune.com
Published: November 11, 2008

LAWRENCE — The future keeps getting bleaker at the site of the once-swanky eatery One Mill Street, reborn as Marco's on Mill Street before shutting down in May amid legal and financial woes.

Enterprise Bank, which holds the nearly $1 million mortgage, is foreclosing on the property. The auction was set for Oct. 29, but postponed when the two feuding owners of the building, Starco Realty Trust and Edith Maroun, declared bankruptcy.

The auction has been rescheduled for Jan. 14, depending on the outcome of the bankruptcy proceedings.

Real estate agent Tom McGuirk of Hampton, N.H., said that in the meantime, he is actively marketing the building for $1.8 million.

McGuirk said there are two parties interested in purchasing the site, one of which would keep the building as a restaurant, nightclub and function hall.

The other is Charlie Daher, who showed up for the Oct. 29 auction and holds a $500,000 second mortgage on the property.

"I want to protect my investment," said Daher, who sold One Mill Street to Harry Starbranch of Starco in December 2006 for $1.5 million. Daher said he would be interested in using the first floor as a restaurant and the upper floors as office space.

Daher purchased the building in 1998 for $210,000. He renovated it for about $1 million, transforming the three-story brick structure — once the headquarters of American Woolen Co. — into what soon became a popular restaurant, serving 400 to 500 people a night on busy weekends.

Daher and his family ran the business for five years before selling it to Starco.

The people involved in Starco include New Hampshire attorneys Starbranch and one of his partners, Stephen Jeffco, along with a third person, Maroun of Salem, N.H., whose family stepped in to help run the business.

To purchase the property, Starco received an $825,000 mortgage from Enterprise Bank, and Marco's on Mill Street, a separate entity run by the Maroun family, obtained a $100,000 mortgage from Enterprise.

Along with the loan from Daher to Starco, the total came to nearly $1.5 million.

But shortly after the purchase from Daher, the partnership deteriorated as the new owners could not agree on how to run the business. The Marouns wanted it to become more of a hip-hop nightclub, while Jeffco and Starbranch were more interested in seeing the property remain a high-end eatery.

Marco's on Mill Street shut down in May after a previous bankruptcy filing by Maroun led to the property being seized by a bankruptcy trustee, who then handed over the keys to Jeffco.

Enterprise Bank refused to comment on the situation.

Attorneys for the owners did not return phone calls seeking comment.

Although the property is at the intersection of Canal and Mill streets in Lawrence, the bankruptcy filing occurred in New Hampshire, where the owners live and work.

Starco declared Chapter 11 bankruptcy on Oct. 29, saying it has between one and 50 creditors who are owed between $1 million and $10 million, according to the bankruptcy filing listed in an online database.

Some of the unsecured creditors include the city of Lawrence, which is owed $20,500 in back taxes. Also listed as creditors are Daher, Bay State Gas, Enterprise Bank, Maroun, Waste Management, and Jeffco, among others.

Chapter 11 allows for a business to reorganize.

Meanwhile, in a separate but related filing, Maroun declared Chapter 13 bankruptcy, or personal bankruptcy, noting in her documents that she is a 50 percent beneficiary of Starco.

She listed as creditors several financial firms, including the bank that holds the mortgage on her New Hampshire home.

Because the bankruptcy filings are so recent, they do not contain a lot of details. Additional documents are expected to be filed by Thursday, after which a hearing would be held for all creditors.

The person handling the foreclosure auction for the bank, Michael Harkins of Harkins Real Estate and Auctioneers in Andover, said the Oct. 29 auction was postponed due to the bankruptcy filing. Harkins said it was well attended by people interested in both the building and its contents.

"We had a few people show up for the real estate, but dozens of people showed up for the equipment," he said, which would be sold separately in a foreclosure sale, presumably so the bank, other lien holders and creditors could recoup as much of the debt as possible.

The three-story building is about 15,000 square feet but has no on-site parking.

The restaurant owners had leased parking from Chet Sidell, who owned property across the street. But that property has since been sold to a developer who is building a federal immigration center at the site.

Community Development Director Tom Schiavone said the real estate agent, McGuirk, has contacted the city to see if a parking plan could be worked out.

"There's the Museum Square parking garage," Schiavone said, "and one or two vacant lots that could hold 10 or 15 cars. But that's always been one of the negatives to that building, there are very few parking spaces connected to it."

Meanwhile, another wrinkle could threaten full utilization of the property. The Lawrence Redevelopment Authority holds a deed on a portion of the property that had been used most recently for patio dining.

City Planner Michael Sweeney said the authority leased that piece of property to Daher for about $2,000 a month.

After the Marouns and Starco bought the property, they never reached an agreement with the authority to lease that portion. The city has court action pending against the owners for failing to pay to use the authority property.

Any future owner would have to come to an agreement to use that patio area, Sweeney said.