A roadblock was thrown in the path of the bankruptcy proceedings of founder and manager of the Blacksmith Restaurant, Gavin McMichael, earlier this week when one of his creditors objected to the bankruptcy.
James Orsillo, owner of Amalia’s restaurant in downtown Bend, claims he loaned McMichael money for his restaurants, including the Blacksmith, Bourbon Street and Gatsby’s, based on McMichael’s representations of the financial health of the restaurants that were not accurate, according to an objection filed by Orsillo earlier this week.
In the objection, Orsillo alleges McMichael “intended to deceive and did in fact deceive [Orsillo] into thinking that [McMichael’s] restaurants were financially sound and successful” in order to convince Orsillo to loan him money.
Since then, Bourbon Street and Gatsby’s have closed. Blacksmith remains open.
McMichael said Thursday night that Orsillo's objection filing is "absolutely dead wrong." McMichael said he is hoping a judge overseeing his bankruptcy will dismiss Orsillo's objections outright.
Orsillo, according to the objection, loaned McMichael $75,000 to expand the existing restaurants listed above in February 2011. Orsillo later spent well over $100,000 on a project to create a new restaurant with McMichael next to Gatsby’s, which was to be called the Ruby Lounge. This restaurant never opened.
The objection claims that McMichael owes Orsillo a total of $182,273 plus attorney’s fees.
Orsillo said in his objection that McMichael provided spreadsheets and a PowerPoint presentation, which all showed that McMichael’s restaurants were financially healthy when they were not.
McMichael said the spreadsheets and PowerPoint Orsillo references were projections for how much the restaurants could make. McMichael said he made it clear to Orsillo that those forecasts were not actual numbers showing what the restaurants were currently making.
"Again," said McMichael,"he is sort of making this up."
McMichael said he was expecting an immediate dismissal of Orsillo's claims.