NEW YORK – A staple in the West Village, Waverly Restaurant has filed for chapter 11 bankruptcy protection after allegations of not paying former workers their overtime. Village Red Restaurant Corp., the company that owns the diner, made the filing on April 6 in the U.S. Bankruptcy Court in New York, as it faces “potential liability in two lawsuits alleging management didn’t pay overtime to a group of former waiters, dishwashers, busboys and delivery men,” the Wall Street Journal (WSJ) reported.

The filing pauses the lawsuits but allows the Waverly to stay open while it works on liabilities estimated “between $500,000 and $1 million” and “up to $50,000 in assets,” the WSJ reported.

A bankruptcy lawyer representing Waverly, Stuart P. Gelberg told the WSJ on April 9, “Yes, we do intend to remain open.”

New York Diners have struggled in recent years with rising rents, the cost of doing business, and even changes in eating habits. According to court records, Waverly founder Nick Serafis “filed for personal bankruptcy protection in January” and the diner’s current owner, Serafis’ daughter, Christine Serafis, “received the restaurant as an inheritance gift,” the WSJ reported.

Among the diner’s creditors are former employees who have sued in the past, but the business disputes their claims, according to the court papers, the WSJ reported.

Last year, a federal judge ruled that Waverly “is liable to the employees for unpaid wages,” and “the court last month concluded a bench trial to determine damages against the diner,” the WSJ reported.

The potential damages are more than $2.2 million, a court filing in June showed, with many of the employees having worked for years at the diner, among them “Valente Garcia who worked there from 1992 to 2015 as a waiter, host and counterman,” the WSJ reported.

Lou Pechman, a lawyer representing the former employees told the WSJ, “The bankruptcy is a blatant attempt to avoid paying the back wages owed to the restaurant’s workers.”

Lawyer for the Waverly Restaurant did not return messages for comment on the case at press time. According to court documents filed last year, Ms. Serafis had no involvement “in hiring or pay decisions for any employees at the restaurant,” the WSJ reported.

The first court hearing on the Waverly Restaurant bankruptcy will take place on May 8.