Landlord tells The Trace: Hit the road

Eviction proceedings against popular restaurant could leave Nashville a city without a Trace

Email | Print By Richard Lawson and E. Thomas Wood

The glassed-in front room of The Trace

The days of The Trace Restaurant may be numbered.

The property owner has cancelled The Trace's lease and wants the restaurant out soon. And the owner has sued The Trace owner Ken Perry in General Sessions Court for $1.2 million, seeking back rent, property taxes and repair and replacement costs. According to a letter Perry's attorney sent to Larry Hayes, a Nashville attorney and a principal in the Hayes family ownership group, Perry has considered filing for bankruptcy.

Hayes furnished copies of recent correspondence concerning the Trace situation to NashvillePost.com.

According to a letter from Hayes to Perry early last month, Perry didn't pay the property taxes in 2006 and hadn't provided sales and use tax returns. When Perry finally paid the April rent, Hayes said in a telephone interview, Perry stopped payment on the check. Hayes said Perry has paid the April rent but only after the lawsuit was filed.

Perry told NashvillePost.com this afternoon that the restaurant is not in default on the lease and will fight the case in court. His lease extends to 2020, and he considers it to be "of significant value." He said the property taxes and all rent has been paid. "He's not owed anything," Perry said of the landlord.

"I don't know Mr. Hayes's motives," Perry said. "For whatever reason, he just doesn't want me in there anymore." The property owner and his representatives "haven't been truthful and honest with me," Perry asserted. "I met face-to-face with them, and what he said to me face-to-face and what he has done is completely opposite."

Perry, a healthcare-entrepreneur-turned-restaurateur, was in financial straits with The Trace last year. Northern Restaurant Group sued Perry claiming he hadn't paid a percentage of gross sales as required under a 2004 purchase agreement, and a judgment for more than $30,000 was entered earlier this year. Murphy Produce also won a judgment of $4,416.96, and there is a state tax lien against the business. Based on figures given in the Northern Restaurant judgment, The Trace had gross sales through the first 9 months of last year of nearly $1.2 million.

Regarding the lien and judgments, Perry said that "all of those are being settled." The Trace, he explained, "went through a tough time financially. It has now rebounded, and we're going strong, so we expect all these issues to be resolved. We expect to stay in business as normal."

Some observers wonder whether The Trace remains entirely what it used to be — the hip place to see and be seen. Metro Councilman-at-large Adam Dread, whose law office is a short walk away, quipped today: "I've walked past The Trace at night, and I swear I've seen tumbleweeds."

Meanwhile, the Hayes family is trying to move forward. "We already have somebody else lined up to come in," Hayes said, although he wouldn't disclose the new tenant yet.

Perry stopped payment on the check so he could apply the funds toward filing for Chapter 11 reorganization, according to an April 23 letter Will Cheek III, an attorney with Bone McAllester Norton, sent to Hayes on Perry's behalf. Cheek wrote in the letter that Perry thought that he had resolved the property taxes issue with partial payments but Cheek added that the partial payments did not mean he was in compliance with the lease. Cheek's letter stated that a payment to Northern was also due and that Perry didn't have the funds to pay the outstanding taxes and Northern.

The ownership group had given Perry until Friday to move out, but since his attorney Nader Baydoun couldn't be in court that day, Hayes said out of professional courtesy the court date will be moved to next week or the following one.

"I don't want people to worry about me," Perry emphasized today. "Whatever happens, I will be fine, and I forgive Mr. Hayes for what he's trying to do to me and my family."