Exchange LA Club Downtown Files For Bankruptcy Protection
The corporation behind Exchange LA, a dance venue located in the Pacific Stock Exchange building on Spring Street, blamed legal disputes with its landlord for the Chapter 11 filing this week in federal bankruptcy court.
The claim, obtained by the Weekly, lists nearly $1 million in rent the club says was withheld as a result of the disagreements:
The battles have been over improvements and city mandated code upgrades -- the building's fire sprinkler system is used an example -- that the venue says the property owner agreed to undertake.
In some cases, according to the document, the club's parent corporation had to fork over the dough for improvements so that it could continue operating; otherwise, the filing states, the city might shut it down.
Its certificate of occupancy has to be renewed every six months as a result of unfulfilled code upgrades to the old structure, the petition says, raising the possibility the club could be closed by City Hall.
The 25,000-square-foot venue at 618 S. Spring St. opened in 2010 after what it says was nearly two years of renovation, a reported $5 million worth. The rest of the structure appears unused. The traders left in the 1980s.
The lawsuits against the landlord, PAX America, which bought the circa-1931 building in 2006 for a reported $7.6 million, started even before Exchange LA's opening and, now, the filing says, PAX no longer owns the building.
The building needs $3 million to $4 million worth of upgrades, the club has said, and the filing says the corporation has won judgments that have yet to be paid. "Pax ... defaulted on numerous settlement agreements," the petition states.
The venue was arguably just another cheesy dance club in a downtown area rife with them until it brought on Insomniac Events, the nation's largest electronic dance music promoter, to help it book some of the world's top DJs.
The bankruptcy document says those DJs sometimes cost $40,000 a gig.
The petition lists the club's largest creditors, including what appears to be the new landlord, New Vision Horizon (owed $945,224 in back rent), a man named Ahmed Al-Goud from Dubai (owed $300,000 for a loan) and others who offered up six-figure loans or "trade debt."
The corporation's Adi McAbian is listed as the signatory on the petition.
The filing, which almost reads like a lawsuit against the landlords, seeks protection from creditors so that the club can keep on rocking -- and employing its 50 to 75 people, including security guards, bar staff, valets and marketers -- while reorganizing its finances.
Namely, it seems, the venue wants that nearly $1 million rent monkey off its back.