Who says you can’t get a second shot at Love? Love nightclub anyhow. The District’s larger-than-life megaclub is back on the market.
Love was sold at a bankruptcy auction last week to a limited liability corporation under the control of development magnate Douglas Jemal. But that sale has been invalidated with a new auction now scheduled for May 14.
Lawyers for Mr. Jemal, who purchased the club for $5 million through a company called 1350 Okie Street LLC, expected the sale to be approved during a Tuesday hearing in U.S. Bankruptcy Court for the District.
But the hearing was anything but typical, with current Love owner Dean Smothers outright objecting to the sale and a mystery developer declaring in court that he would outbid the sale price and pay $7 million for the property.
Moreover, a lawyer for the company that oversaw the initial auction questioned whether the process might have been improperly influenced in an attempt to keep the property’s sale price low.
Twenty potential buyers toured the property in Northeast D.C. prior to the auction, but saw the club in a state of disrepair after the D.C. Office of Tax and Revenue removed items it was planning to sell at its own auction to recoup back taxes owed by the club, according to auctioneer Tranzon Fox.
The club, which was closed in October, owed the city some $298,600 in taxes, city officials said.
“The property was devalued by the actions of the city and was left in less than desirable condition,” said Jeffrey Sherman, attorney for Tranzon Fox. “Fast forward to the day of the auction and there is one bidder and one bid — which was the entity of Mr. Jemal.”
“Something is rotten in the state of Denmark, we just can’t put our finger on it,” Mr. Sherman said. An attorney for Mr. Jemal, who was one of the few people who attended the hearing that did not approach the bench to speak, called the allegations as “ridiculous.” Despite the described state of the club, one interested buyer thought it was worth more.
Jeffrey Sibert, owner of property rehab company Options Inc., shocked everyone in the courtroom Wednesday by proclaiming he would pay $7 million for Love. While he wouldn’t discuss his plans for the property, Mr. Sibert made one thing clear, “No nightclubs.” His offer, contingent upon inspection of the property, immediately caught the attention of former Love owner Marc Barnes, who also attended the hearing. Mr. Barnes built the megaclub in 2001 but sold it in 2010 after declaring bankruptcy. He still has money tied up in the club and immediately began advocating to allow the new mystery buyer to bid. “We know this building is worth $7 to $10 million,” Mr. Barnes said in court. “There are another $1.3 million worth of creditors who would really use that $7 million that the building could draw.” Mr. Smothers also attempted to derail the $5 million auction sale, noting that he has several offers to refinance and renovate the club, hopefully into something more “community friendly.”
Judge S. Martin Teel Jr. signed an order Wednesday that will allow the new auction to take place. Interested bidders have until 5 p.m. Monday to submit a $500,000 deposit to Tranzon Fox to secure their place at the courthouse auction.
If neither Mr. Sibert nor other interested bidders submit deposits, the auction is off and Mr. Jemal’s company will be declared the winner.
Mr. Jemal’s Douglas Development Co. is redeveloping the Hecht Co. warehouse just a block away from Love nightclub and plans to turn the building into a mix of apartments and retail featuring an organic market and gym.
Asked his interest in Love, Mr. Jemal succinctly replied, “I’m developing in the neighborhood. That’s my interest.”