Church & State Files for Chapter 11 Bankruptcy Amidst Ongoing Labor Lawsuit

Arts District French bistro Church & State has filed for chapter 11 bankruptcy, Eater has learned exclusively. The popular restaurant was one of the first to bring new food and drink options to the now-buzzing Arts District back in the fall of 2008, but more recently has been embroiled in a years-long legal battle brought by a former employee that has reportedly wrecked its finances.

Per the legal filing given by a source to Eater, Church & State has entered chapter 11 bankruptcy as a way to stave off a variety of debts and protect from an ongoing lawsuit brought by a former employee. There is an emergency hearing scheduled for this week to determine the restaurant’s plans to “provide adequate assurance of future payment” on their outstanding bills, while also remaining operational and ensuring an ability to appropriately pay staff members on time.

Reached for comment, owner Yassmin Sarmadi tells Eater:

Nearly five years ago, Church & State was sued for alleged wage and hour violations. Since the case was first filed, we made every effort to resolve it. When the cost of the litigation -- in both time and money – started to negatively impact the business, we decided to file for bankruptcy to reorganize our finances. The restaurant remains open, and we remain focused on giving our customers what they have come to expect from us: food and service of the highest quality.

Per a source, a previous employee filed suit against Church & State several years ago, alleging (among other things) unpaid wages for time worked. The restaurant reportedly tried to settle for around $150,000, but the former employee has been asking for $1 million instead, and possibly trying to turn the suit into a class-action filing as well.

Sarmadi and chef partner Tony Esnault also own Spring in Downtown. Both restaurants have been well-reviewed by critics and — especially in the case of Church & State — are seen as bastions of finer dining in greater Downtown, but neither is immune from the many pitfalls that come with owning a restaurant. Even local chicken and waffle star Roscoe’s filed for chapter 11 bankruptcy last year, following a million-dollar judgment against them also brought by a former employee. More on this as it comes.

• LA’s 12 Essential Arts District Restaurants [ELA]