Despite its penchant for raw food in the kitchen, Sushi Ronin is burning money in the courtroom.
The LoHi sushi joint filed for Chapter 11 bankruptcy protection last month, nearly three years into a nasty legal battle between the business’ majority owner and initial investor, where each alleges misconduct and blames the other for the restaurant’s failure to ever turn a profit.
“At this point, this lawsuit is just very, very vindictive,” said Alex Gurevich, Sushi Ronin’s majority owner.
Chapter 11 bankruptcies are meant to allow a business to restructure and keep operating while paying creditors over time. But due to the restaurant’s steep debts — of which about $200,000 are lawsuit-related — Gurevich, who has an accounting degree from CU, said that closing and liquidating through Chapter 7 is not off the table.
“The legal fees have exhausted this restaurant,” he said.
Sushi Ronin has operated at 2930 Umatilla St. since 2016. But sales have been dropping in recent years. The restaurant did $1.47 million in revenue in 2021, then $1.39 million in 2022, according to bankruptcy court filings. This year, it hauled in $858,000 as of Nov. 16, when it submitted the filing — on pace for less than $1 million.
The legal drama dates to February 2021, when the restaurant and Gurevich were sued by minority shareholders Rebecca Crawford and son Jeremy Crawford, who invested in Sushi Ronin as Bugatti R&J LLC. The Crawfords accuse Gurevich of diluting their shares, suppressing the business’ profit and engaging in shady business practices, ultimately amounting to breach of contract.
The Crawfords see the bankruptcy as “a further effort to delay the prosecution and resolution of Bugatti’s claims in the pending case,” per a statement provided by their lawyer, Christopher Groen of Fox Rothschild.
‘Management fees’ to co-owner one source of contention
In its bankruptcy filing, Sushi Ronin said it has approximately $31,000 in assets and $556,000 in liabilities. The business said it owes tens of thousands of dollars to its landlord, and about $18,000 to a Chicago company for marketing.
But the company listed its largest creditor as VK LLC, to which it owes $474,000. That entity is owned by Gurevich, a longtime Denver restaurateur whose previous concepts include the Uptown Latin American lounge Limón and Lakewood breakfast spot Cafe Bisque.
Gurevich said he initially loaned Sushi Ronin money through VK LLC to cover the restaurant buildout, which went more than $300,000 over budget. Since then, he said, his entity has loaned money for payroll, operations and legal fees.
VK LLC has also been charging the restaurant “management fees,” which started at 8 percent of monthly revenue and decreased to 6 percent in 2019, according to court records.
Gurevich calls this his “salary.” The Crawfords, meanwhile, call the fees “excessive.”
“Gurevich has intentionally caused the company’s profits to be depressed so that it could avoid repayment of its obligations,” the latest version of their lawsuit states.
An Uptown lease falls through, and a chef is out
The bankruptcy filing is just the latest drama for Sushi Ronin, whose early days featured a problematic felony, a canceled lease and a power struggle involving the business’ chef.
Gurevich told BusinessDen he has known Jeremy Crawford for a little over a decade. In 2012, he said, Jeremy and his mother invested in Ay Caramba, a Mexican concept in Cherry Creek that Gurevich opened in early 2013. The restaurant was sold the next year, with the proceeds going towards the opening of Sushi Ronin.
The group originally hoped to open Sushi Ronin at the corner of 18th and Pennsylvania in Uptown. But the landlord there nixed the lease upon learning Jeremy had a felony on his record. That cost the business nearly $120,000, Gurevich alleges in his countersuit, which doesn’t specify the nature of the conviction.
Gurevich said it was then determined that Jeremy couldn’t be associated publicly with the business due to his record. So, he and his mother created Bugatti R&J LLC to represent their interest in Sushi Ronin. They contributed $440,000 of the total $1.1 million for the eventual buildout of the restaurant at its current location, according to their lawsuit.
The agreement was for the Crawfords to receive 50 percent of the profits until they were paid back $350,000 — the remaining $90,000 was intended as an “investment” into Sushi Ronin, according to Gurevich.
The Crawfords say in court that not a dollar has been repaid. Gurevich doesn’t dispute that.
“The company has never shown profit. And the reality is, when the company is not profitable, what can you really do, right?” he told BusinessDen.
It’s not just about money. Gurevich said that, at multiple points over the years, Jeremy harassed Sushi Ronin staff and just generally acted erratically.
“He was coming around behind the bar during service inebriated, claiming that he was the owner and so forth, and they just made a lot of people very uncomfortable,” Gurevich said.
Groen, the lawyer for the Crawfords, said he denied the allegations.
Gurevich told BusinessDen there was a “substantial falling out between the originating chef and Jeremy Crawford.” That chef, Corey Baker, was let go in early 2019, days after Baker said he asked for more control over operations.
“I have no idea why they would do that. It was a weird situation. I quietly picked up my stuff and left,” Baker told 5280 in 2019.
For their part, the Crawfords allege that their ownership of Sushi Ronin, initially 30 percent, was diluted over time intentionally by Gurevich. They say Gurevich simply gave away shares to restaurant employees like Baker or held capital calls, notices to shareholders to contribute funds for business expenses. If these calls are not answered, then the shares needed to raise that capital are “diluted” from existing owners, effectively decreasing their stake.
Bankruptcy filings state that the Crawfords’ stake in the business is now just 3.8 percent. Gurevich’s stake is 80 percent, and two other individuals control the remainder, per the filings.
The Crawfords are accusing Gurevich in court of improper business practices, such as starting other “Ronin Concepts” without them around the metro area that feature the same interior and menu. They also claim that inventory from Sushi Ronin has been going missing, ostensibly to support Gurevich’s other Ronin enterprises.
Gurevich said he was open to a settlement, but balked at the Crawfords’ request for $600,000 during mediation. A five-day trial was scheduled to begin next year, but is now on hold due to the bankruptcy filing.
Gurevich, meanwhile, said he still believes in the restaurant.
“I believe that it has legs. I believe that it has a reputation,” he said. “I think that we can turn it around and continue operating.”
Allen Vellone Wolf Helfrich & Factor is representing Gurevich in both the bankruptcy and lawsuit.
This story was reported by our partner BusinessDen.
