l’Auberge owner blames default on competition, recession

‘You cannot live off the elite alone,’ Josef Reif says

For Josef Reif, the failure of his celebrated l’Auberge restaurant last year after more than three decades in business in Kettering is about more than red ink and personal bankruptcy.

“It’s ripping your heart out, ripping your soul out. You don’t know where to turn and you are in an age group where really to start all over again is not possible,” said Reif, 65, of Centerville. “It’s been the hardest year in my life to find satisfaction in any slight way.”

Reif defaulted on $1.5 million in mortgage loans from LCNB National Bank of Lebanon and a $35,000 U.S. Small Business Administration loan from the same bank. He lost a judgment in Montgomery County Common Pleas court in 2011 and watched the former four-star restaurant turned over to the bank and sold.

SEE other local businesses with bad SBA 7(a) loans >>

Reif, who founded the restaurant with chef Dieter Krug in 1979, said his financial troubles began when he refinanced his mortgage in 2006 to pay Krug his share when the chef retired. Reif also blames increased competition from restaurants at The Greene, the loss of big-spending corporate customers when NCR and Mead left town or downsized, and most of all the Great Recession.

“You cannot live off the elite alone,” said Reif, who bemoans the arrival of high-end restaurant chains that he said poached his customers.

Last year he completed Chapter 7 bankruptcy, and although he retains his home in Centerville, Reif said the bankruptcy “stripped me of everything I had.”

LCNB approved the SBA loan in September 2009 when Reif’s business was already struggling, and he said he used the money to help cover his mortgage debt.

Nine months later the bank sued Reif for the unpaid mortgage and the SBA loan. The SBA had already paid the interest on the loan to the bank and when Reif failed to repay the principal, SBA paid LCNB $35,000 to cover the federal guarantee on the loan.

LCNB President Steve Foster said he could not comment on the specifics of the loan. But Chief Lending Officer Matt Layer spoke generally about the type of SBA loan Reif obtained. It was an America’s Recovery Capital loan, part of nearly $1.5 billion allocated to SBA as part of the federal stimulus program to jump-start lending in the wake of the 2008 financial collapse.

“The whole premise of that program is the whole United States was going through some pretty tough times and it was meant to stabilize the small businesses that were having a tough time,” said Layer, noting that of the four ARC loans LCNB awarded, only l’Auberge failed.

SBA Spokeswoman Emily Cain said that prior to loan approval the agency would have reviewed the l’Auberge loan because LCNB is not a preferred lender with automatic approval privileges. She said the loan was charged off on Sept. 9, 2011, to the U.S. Treasury, which was able to collect all but $18,745. Treasury halts collection efforts when a bankruptcy is filed.

Cain said the America’s Recovery Capital loan program — in place from February to September 2009 — was designed to help troubled businesses get some breathing room and hopefully survive. It could be used to pay debt like a mortgage, even to the lender who approved the SBA loan, as long as the loan was “designed to promote the borrower’s long-term viability.” SBA would have known Reif’s plans for the money before it was approved, she said.

Reif said he always thought he’d be able to pull through, even when customers did not return as usual in April 2010 after the slow winter months. “If somebody would have told me that this would happen I would say absolute no way,” said Reif. “I thought I was bullet proof.”

Sitting at a table in his home, Reif flipped through photographs of the l’Auberge heyday when presidents and other celebrities stopped by. “A lot of my ex-employees still call and say ‘boss, when are you ready to go again, we are waiting for you,’” said Reif. “That’s the old song. It always takes the green stuff.”

Reif knows it will be a challenge to find the “green stuff” to finance a new venture.

“Hopefully I get lucky and find a second chance to continue,” he said. “I’m still looking around trying to find a little spot for a bistro with a nice bar to continue the tradition.”

Reader Comments ...

Next Up in Community News

Springfield High hosts unique college fair
Springfield High hosts unique college fair

Springfield High School students were exposed to a one-of-a-kind college fair this week. Twelve Historically Black Colleges and Universities were present at the first HBCU Day, including Norfolk State, Florida Agricultural and Mechanical, Fisk, Spelman, Howard, Central State and Wilberforce universities. These schools were created to serve the African-American...
AC/DC co-founder Malcolm Young dead at 64
AC/DC co-founder Malcolm Young dead at 64

Rhythm guitarist Malcolm Young, the co-founder of the rock ’n’ roll group AC/DC, died Saturday, Rolling Stone reported and the band announced on its website. He was 64. Young had been suffering from dementia for the past three years, which forced his retirement from the band that he founded with his brother Angus Young in 1973...
Texas residents find mail dumped near sewer drain
Texas residents find mail dumped near sewer drain

Residents in a Texas neighborhood are angry that their mail apparently has been going down the drain. Brenda Tisdale was walking her dogs in a southwest neighborhood in Mesquite when she noticed a few clean, white pieces of paper in a sewer drain, KTVT reported. “I was thinking, ‘that’s where all of our mail has gone,&rsquo...
Mugabe refuses to step down as Zimbabwe’s president
Mugabe refuses to step down as Zimbabwe’s president

Thousands of Zimbabwe residents marched in the streets of Harare on Saturday, demanding the resignation of President Robert Mugabe, CNN reported. The protests in the capital city occurred days after the 93-year-old president was put under house arrest by the army, which also detained some of his key political allies. Mugabe has been Zimbabwe&rsquo...
Happy birthday: Co-workers buy car for fellow employee 
Happy birthday: Co-workers buy car for fellow employee 

A Michigan man will never forget his 19th birthday, thanks to the generosity of his co-workers, WJRT reported. Noah Robinson had been riding his bicycle to work from Saginaw to Kochville Township, pedaling the 6 ½ miles in 45 minutes regardless of the weather conditions. He works in the shipping department at Glastender and lives with his...
More Stories