Don Ramon's avoids closure for now, files for Chapter 11 bankruptcy

Don Ramon's avoids closure for now, files for Chapter 11 bankruptcy
Photo: Facebook
By Jay Barmann - Published on March 11, 2021.

The iconic, nearly 40-year-old SoMa Mexican restaurant Don Ramon's (225 11th Street) has skirted a permanent closure for now as it attempts to escape its current financial woes via Chapter 11 bankruptcy restructuring. 

Hoodline broke the news last fall of the restaurant's financial situation, and that it was in danger of closing due to what was characterized by Assemblymember David Chiu as "the triple threat of the pandemic, the recession and aggressive hard-money lenders." Now the San Francisco Business Times has word that the restaurant has filed for a small-business bankruptcy — under a new subchapter 5 category of filing that, per the Business Times, "makes it easier for small businesses to file for reorganization by eliminating some requirements and expediting the process."

Co-owners and sisters Leonila, Natividad (Nati), and Lucy Ramirez hope that the bankruptcy process will help them dig out from under a financial boulder, which was made heavier by a $5 million loan they took out in 2018. They told Hoodline that the loan was necessary to help deal with damages to the restaurant's building that they said were caused by upstairs tenants — who allegedly had created an illegal residence in what was supposed to be commercial space. The damages included some sort of flooding that began on the third floor and caused a ceiling to cave in in the restaurant's men's room.

As Nati Ramirez said, "These people felt entitled, and felt they could just come in and take over. It was similar to the Ghost Ship situation. They would host private parties — sometimes until six in the morning."

The circumstances surrounding the tenants and their eviction was surrounded by some controversy, with Hoodline commenters noting that the tenants were "a group of local artists and at-risk queer youth," and there was something disingenuous about the story about the damages caused. A publicly available lease agreement appeared to show that subleases to subtenants for artists' studio space was permitted, however the Ramirezes insist they did not condone the space becoming a residence.

Needless to say, the pandemic impacted the legacy business further, and according to the filing, they had a net income loss of $274,000 in 2020. When Hoodline spoke to the sisters last fall, they said their lender was refusing to negotiate over missed loan payments, despite the national emergency, and they were moving toward a foreclosure.

The building, which the Ramirezes have owned since their parents first opened the restaurant in the early 1980s, 

"Negotiations to try and work something out with the lender pre-bankruptcy were unsuccessful," says the Ramirez's attorney Gregory Rougeau, speaking to the Business Times. "The lender was unwilling to delay the foreclosure sale further, and so the LLC had to make the decision to file bankruptcy."

Don Ramon's remains open for takeout and delivery, and they may end up reviving a partnership they briefly had in the fall providing food for the Oasis rooftop down the street — Oasis was able to open for outdoor dining with Don Ramon's as a food partner, but that all ended when outdoor dining was shut down in early December. Oasis, which has also been in dire financial straits with back rent due, had a successful telethon last weekend that raised over $253,000 to help it stay open — far and above the original $100,000 goal.