The Greek-Americans are entrepreneurs. They came to this country with not much in terms of money, but a lot in terms of ambition. Through hard work they have opened all sorts of small businesses, including restaurants, coffee shops, diners, florist shops, etc.
Even before COVID-19, small businesses were under economic pressure. The shutdown of the COVID-19 pandemic has put the vast majority of the Greek-American community under intense financial stress.
I will try to explain the plight of a typical restaurant owner. A restaurant owner typically has formed a business entity to conduct business to protect himself from personal liability. In other words, by forming a corporation or LLC, the restaurant owner is protected from the debts and liabilities of the business. However, when that restaurant owner signs a lease for a store with a landlord, that landlord will typically requires a ‘personal guaranty”’ of that lease meaning is that the small business owner is personally responsible for the rent of the business payable to the landlord.
During the pandemic, the restaurants have been virtually shut down. With no money coming in, the rent owed to the landlords is building up. The restaurant owner now has one of three choices.
The first is to try to ‘modify’ the lease and, for a period of time, put in writing that the landlord will accept a lesser amount of rent that is affordable to the restaurant. While some landlords are amenable to this approach, many are simply won’t negotiate.
The second choice is to keep the restaurant open with the hopes that the pandemic ends, and business returns. The problem is that the personal liability continues to grow under the personal guaranty of the lease. This places the entire family fortune which may include the house at jeopardy because when the landlord sues for the rent he may be able to put a judgment against the house or other assets.
The third choice would be to close the restaurant and preserve whatever assets that restaurant owner has left.
While restaurants have received the PPP loans, they are not sufficient to cover the expenses of employees and rent that is owned. As any restaurant owner will tell you, the PPP loans are not enough.
The City of New York has passed an emergency measure preventing landlords from going after the business owners personally. This, however, does nothing to protect the business from being
evicted. Further, this offers no protection to restaurant owners outside of the City of New York. Lastly, this law may or not be constitutional.
I have written to all of the New York politicians to highlight this particular threat to small business and ask if they have a plan. None of the politicians have written back to me, and certainly none have come up with a plan or a proposal.
I am not commenting on the propriety of a ‘lockdown’ to save human life. I had a severe case of COVD-19 and was in the intensive care unit and I appreciate those efforts. If politicians are going to take away people’s livelihood and the ability of parents to feed their children, then they should have a plan to compensate them.
I am speaking on a failure of our elected local politicians to even acknowledge that the lockdown is destroying families, a failure to speak out on the issue, and a complete failure to have a plan or give any guidance whatsoever.
Andreas Vasilatos is a lawyer specializing in divorce and business litigation.