The owners of the Chicago Chop House have agreed to pay an undisclosed amount to Chicago real estate developer Sean Conlon for allegedly cutting him out of their 2017 purchase after a previous $5.9 million deal to buy the iconic River North steakhouse was terminated.
The agreement, filed Thursday in Cook County Circuit Court, ends a lengthy legal odyssey that turned would-be restaurant partners into rival litigants, pending a final settlement payment, according to court filings.
In April, the court issued a partial summary judgment in favor of Conlon and fellow Chicago real estate investor Steve Horvath, ruling their company, Wexford Property Consultants, was entitled to compensation from the Chop House owners for allegedly violating a confidentiality agreement that precluded their direct purchase of the restaurant.
Located in a 126-year-old Victorian brownstone on Ontario Street, the Chop House has been a Chicago steakhouse fixture since 1986. More recently, it has been serving up red meat for attorneys in the protracted ownership battle
Conlon, a high-profile entrepreneur and host of “The Deed” on CNBC, partnered with Horvath to buy the Chicago Chop House for $8.2 million in December 2016. They began several months of due diligence, negotiating the price down to $5.9 million and reaching out to potential co-investors.
One such potential co-investor was Chicago restaurateur Matthew McCahill, who then brought Nashville-based restaurateur Phil Martin into the mix. In March 2017, McCahill and Martin signed identical confidentiality agreements, which included a 36-month window preventing them from gaining an interest in the Chop House without “appropriate compensation” to Wexford, according to court filings.
The deal was structured to give Martin and McCahill a two-thirds stake, with Martin supplying the capital and McCahill operating the restaurant. Wexford would own one-third of the Chop House as a finder’s fee for “bringing the deal” to Martin and McCahill, according to court filings.
But in June 2017, Wexford terminated the purchase agreement after McCahill and Martin didn’t provide the cash to close the deal.
“There was a concern about the ability to close and so Conlon terminated the purchase contract,” said Michael Forde, a Chicago attorney representing Wexford Properties. “They didn’t want to lose their earnest money, but Wexford was still interested in doing the deal.”
Martin O’Hara, an attorney representing Martin, McCahill and Chop Hospitality, declined to comment on the settlement agreement.
Within days of the Wexford termination, Martin and McCahill began negotiating directly with Charles Patel, the then-owner of the Chop House. By August, they struck their own deal to purchase the Chop House for an undisclosed price, completing the acquisition three months later through their respective companies, 6058 Properties and Chop Hospitality, according to court filings.
The new purchase price was roughly the same as the original deal, Forde said, but essentially cut Wexford out of its one-third stake — without compensation.
Launched in a renovated and expanded Victorian by veteran restaurateur Henry Norton in 1986, the Chicago Chop House — with its distinctive neon sign — quickly established itself as a significant player among the city’s venerable steakhouses.
A 1987 Tribune review touted a serious downstairs bar where the crowd “pounds down manhattans and martinis,” proper steakhouse ambience and “straightforward” chop house fare, with meat and potatoes at the center of the menu.
The Chop House underwent a $1 million renovation under the new owners in 2018 and continues to feature the pricey fare of a signature Chicago steakhouse, from the $65 truffle mac and cheese side dish to the $129 tomahawk rib-eye.
While McCahill sold his interest in Chop Hospitality in January 2019, he and Martin remain bound by the confidentiality agreements, according to the April court ruling. The litigation, which did not determine damages, is on hold pending execution of the settlement.
The defendants made an initial settlement payment, and have until Nov. 10 to pay the balance in full, according to the agreement.
