Lao Sze Chuan, whose acclaimed flagship restaurant earned owner Tony Hu the unofficial title “Mayor of Chinatown,” is seeking Chapter 11 bankruptcy protection for its satellite location on the Magnificent Mile.
The restaurant at 520 N. Michigan Ave. in River North, which is perched on the fourth floor of the Shops at North Bridge, owes more than $1.37 million on its lease, according to the filing Wednesday in U.S. Bankruptcy Court in Chicago.
“We have a little bit of an issue with the landlord, just for the downtown location,” Hu, 55, said Thursday. “We’ll be OK.”
A spokesperson for Cushman & Wakefield, which manages the North Bridge retail center, declined to comment on the pending litigation.
A Chinatown staple since 1998, Lao Sze Chuan has expanded to nearly a dozen locations in Chicago and the suburbs, as well as outposts in Connecticut, Maryland, Minnesota and Texas.
The Michigan Avenue location opened in December 2014. Hu said it will remain open during the bankruptcy proceeding.
The voluntary Chapter 11 petition for Lao Sze Chuan Downtown lists assets of $500,000 to $1 million, and liabilities of $1 million to $10 million. The largest unsecured claim is $1.37 million for breach of lease, which Lao Sze Chuan is disputing, according to the filing.
The Shops at North Bridge, a 675,000-square foot retail center anchored by Nordstrom’s, is owned by the Alaska Permanent Fund, a $75 billion investment fund that invests at least 25% of the state’s oil royalties to pay dividends to Alaskans.
In December 2021, Macerich, the Santa Monica, Calif.-based retail estate firm, essentially gave up its 50% stake in North Bridge to its partner, the Alaska Permanent Fund, which assumed the debt on the joint venture. Macerich took a $28 million loss in the transaction, according to the company’s annual report.
North Michigan Avenue has struggled during the pandemic with vacancies, high-profile store closures and the broader shift to online shopping.
The pandemic has also taken its toll on the restaurant business. In 2020, 90,000 restaurants permanently closed as sales fell by 24% to $659 billion across the U.S., according to the National Restaurant Association. The restaurant industry has been recovering, with sales projected to reach nearly $1 trillion this year, according to the association.
An accomplished chef, Hu has been a resilient restaurateur, winning accolades for bringing authentic Chinese cuisine to Chicago when he emigrated to the city in 1993. A graduate of the Sichuan Culinary Institute, he worked at several Chinese restaurants in Chicago before opening the first Lao Sze Chuan, which has been a staple in Chinatown for 25 years.
He has since created a thriving restaurant chain, opening and closing a few locations, but retaining critical mass and a loyal following. The Lao Sze Chuan empire even survived Hu’s 2016 federal conviction for money laundering and wire fraud after failing to pay more than $1 million in state and city taxes from cash sales at his restaurants.
Hu was forced to sell several restaurants to make restitution to the government.
When Lao Sze Chuan opened on Michigan Avenue nearly a decade ago, it was praised by then-Tribune restaurant critic Phil Vettel for adding crispy Peking duck to the menu. Several pre-pandemic Tribune reviews in 2019 hailed Lao Sze Chuan as one of the best restaurants along Michigan Avenue.
Despite the lease dispute and Chapter 11 filing, Hu said the Michigan Avenue restaurant is still doing well.
“The restaurant is open for business, the business is good,” Hu said. We plan to be at this location for a long time.”
