Jack’s Backyard owner Kathy Jack has not returned calls from Dallas Voice about the venue’s abrupt closing 10 days ago. But Marla Custard, one of the property owners, alerted us to some of the details behind the closure.
According to court records, Jack filed for Chapter 11 bankruptcy on Dec. 16, 2010, for the business, Jack Out of the Box LLC. Documents show the business owed hundreds of thousands of dollars to investors including Custard, as well as the IRS, the state comptroller’s office and the Texas Alcoholic Beverage Commission.
Considering that business seemed to be good at Jack’s Backyard, Custard said she’s still unclear about why the bills weren’t being paid.
Days before the club’s final Sunday on June 26, a judge dismissed the bankruptcy filing, saying the numbers didn’t add up in Jack’s plan to get out of the debt.
“That’s when it became clear Jack’s Backyard would have to close,” Custard said. Custard is one of about 15 people listed as creditors who invested in the venue, including recognizable names in the LGBT community such as Howard Okon, Laura McFerrin and Matt Miller.
Custard said she’s personally out more than $600,000, between her investment in the bar and loss of rent payments.
“We love this place,” Custard said. “I’m so mad at her [Jack] for this. It’s heartbreaking, but at the end of the day, it all rests in Kathy’s lap.”
The landowners are now looking for a new tenant.
In an email to the Dallas Voice, Custard forwarded documents from the case and gave us her breakdown of the events that transpired before the closing. Read a portion of her email after the jump.
There are two bankruptcies – Jack Out of the Box (JOB) filed for Chapter 11 on 12/16/10. The US Trustee’s office and the State Comptroller each filed their Motion to Dismiss on 4-29-11. The Motion does not prevent the Debtor from filing a Plan of reorganization of the business and repayment to creditors. A Plan was filed. The hearing on the Motion to Dismiss was set for and held on June 23rd at 1:15. The feasibility analysis generated by the court shows Jacks could not repay its debts in the plan proposed. The Chapter 11 case was formally dismissed by the court and legal protections that are afforded the debtor against its creditors under Chapter 11 are removed. Jacks owes $90,000 in unpaid back rent, $40,000 owed to the IRS, $11,000 to TABC, $40,000 to TX Comptroller, and 15 individual creditors who have received no payments toward their financial loans to Jacks. And yet sales were approximately $1.2 million?
The second entity, Jacks Chill Grill, filed for Chapter 11 bankruptcy in late April. It is my understanding that it is expected that this case will also be dismissed. The Motion to Dismiss was filed 6/29/11. The Chill Grill entity holds the TABC license and thus the debt owed to TABC is attached to this LLC. Taxes had continued to go unpaid for several months “post-petition”, meaning after Dec 16th filing. A debtor must meet certain financial obligations post-petition such as staying current with payment on taxes and rent in order to sustain the Chapter 11 protection privileges provided to the debtor.
The court terminated her Chapter 11 status on Thursday and I offered to let her stay and operate through the weekend to sell her liquor and food inventory and make some cash before closing the doors. I and my partner found the property in 2008, designed it, financed a large portion and invited her to be the operator. I have had every reason to hope she would succeed.
It is an egregious misrepresentation by Kathy Jack to depict herself as having anything less than full accountability for the closing of Jacks Backyard.
Sounds like Kathy Jack pocketed someones money instead of paying bills! Did she buy a new house with the money or buy new cars, if so someone should file a claim/lien against her for there said share of the money! Kathy Jack I think you should respond before your name gets to muddy here!
I’m inclined to agree. Ms. Jack needs to make a statement, and quick, or her name is going to get awfully muddy awfully quickly.
What’s the point of a response when people like you rush to judgment? I assume you are familar with the fact that businesses generate both profits and losses…and I love how conveniently Custard quotes the gross profit, but completely fails to comment on the expenses…its just sad that the business was a no go…for all the people involved, including the investors and employees…trying to turn it into a scandal by making unfounded accusations is petty….petty and ill willed….
I’m surprised it lasted as long as it did at that location. Sure, the patio was nice, but every time I went there, the place was practically empty. I’d assume that place was bleeding money. It’s hard to make a lesbian bar successful off the strip. (e.g. Crush, Buddies… and now Jack’s)
@la………Rather than interpret these comments as a “rush to judgment” on Kathy, I think the point here is that, since Ms. Custard has come forward with this information (regardless of her reasons), it now falls to Kathy Jack to respond in SOME way so that she ISN’T automatically made out to be the “guilty party”. Believe me, I’ve known Kathy for many, many years and absolutely adore her. I would love to hear from her as well.
I don’t know Kathy personally but she’s a member of our community and I believe she deserves a chance to speak before people rush in with nooses. Good grief! Some of you people would probably eat your own young, given the opportunity.
I’m shaking as I type this because I adore Kathy and she has been one if my very best friends since 1992. I’ve been with her @ Jack’s since construction…I’ve seen the numbers. I don’t profess to be a shrewd business woman, but we’ve been pushing uphill since we opened. Kathy nor Susie have new cars or a new house…if you knew either of them, you’d know they’d give you the shirt off their backs. Jack’s was a huge undertaking and I don’t think any of us were prepared for that…as a family we just wanted to push forward and create the Oasis vibe that was Jack’s….a place for everyone…and I do mean everyone. We were thrilled to have our “girls”, but were very fortunate to pull in a very diverse crowd most any night of the week…we thank all of you. Sure Kathy made some mistakes…we all did…I could’ve done better…learned more songs…booked more, better, different bands. The fact that we lost “our baby” at our own hands doesn’t make us bad people, but…perhaps less capable than we would’ve hoped. So drop your nooses folks…there’s no Swiss bank account or new “anything”…just some folks sad about losing our place and hoping we find a new one real soon so that we may host our friends…and that’s the truth.
There is no noose, there is no villain. There are only facts.
In some early news reports, there were some unfortunate quotes from Kathy Jack that led readers and patrons to believe that the landlord was responsible for Jack’s closing. That is untrue and the court documents prove it.
Unfortunately, as the landlord, Ms. Custard was put in a position of having to defend the fact that she was as invested in the success of the bar as anyone else- so much so that she allowed the bar to remain open despite unpaid rent. That choice was made with the hope that the investors, owner and patrons would eventually find a happy ending and that Kathy Jack could pull it out and pay back the investors from whom she borrowed money.
Anyone who drew a salary or had a great time at a great place over the past few years should know that Jack’s Backyard closed because a bankruptcy judge made that decision, not the landlord. The landlord went into personal debt to keep the communal dream alive.
As someone who was very involved in the creation of Jack’s, I can honestly say that nothing but good intentions (on the part of EVERYONE involved) were ever a part of it’s history. Unfortunately, good intentions don’t always equal success in business.
The most important thing to remember is that replacing sadness over Jack’s closing with anger and finger-pointing is never a good idea for anyone. The facts speak for themselves and they are available as a matter of public record.
I have to agree on Kathy Corbin’s response. People who have never owned a business of their own have no idea the amount of money that flies out the door with employees, repairs, maintenance, vendors, utilities, city code enforcement and permits, and product to keep the doors open. If one thing is misfiled, not filed, or forgotten, the IRS, TX Comptroller, and the TWC, will eat you for lunch and lock the doors without even thinking twice. It’s so sad that a lynch mob has now come out to get their two cents in, or more accurately, back. If you take a chance of being an investor, in any kind of business, there’s always a chance of success but more likely failure. That is just how it is, especially in these times when we pay more in taxes of all kinds, rather than seeing a profit. It is hard to be a small business period. I know first hand. Even though we are a successful business, it takes a lot of hard work and mistakes, I’ve been there. The mistakes make a bigger impact because they cost more and they make it much more difficult to catch back up. Business owners do what we can just to survive, and we are not embezzling funds or buying lavish cars and houses, we are just trying to keep the damn lights on.
I have owned a business for many years, I have known Kathy Jack for many years, I have been involved as a creditor to Jack’s Backyard, and have always been a patron of the place. Kathy has mismanaged, abused, and fooled many of you…. When a friend owes you money, they should at least return your calls…this has not been the case. Many of us in the Dallas gay community have lost financially as well as socially by the closing of Jack’s Backyard…and it is not Marla’s fault! If you don’t know the facts, don’t bother commenting!
This is so sad for everyone involved. Jack’s was our hang in the Cliff and I will miss it terribly! I have had the pleasure of being good friends with Kathy and Susie for many years. They are both hard working, generous, compassionate women, who have given so much back to our community. They were brave enough to follow the dream. Sometimes it just doesn’t work out. I’ve been there. I know how hard it is to try to pay off start up debt, rent, taxes, payroll, taxes, utilities, taxes, alcohol, taxes, food, taxes. Yes, Kathy had lots of experience, so did I. But when you jump out there on your own, things are different. When you are working 14-18 hrs a day and not taking a paycheck so you can pay your staff, wiping out your personal savings and taking a second lien on your house, to keep things going, things become quite stressful. Mismanagement, maybe, but intentional abuse and foolery? I find that hard to believe. If you have never opened and run a bar/grill, then you have not walked in Kathy’s shoes. No one knows everything. Remember there are at least 2 sides to every story. I look forward to the next Jacks.
What a mess. The real issue here is not how difficult it is to run a business or what a great friend Kathy Jack is. The real issue is why she refuses to make an honest statement and clear up the misconceptions and false information.
After searching around for the published news accounts of what happened, it’s very clear that something doesn’t add up.
From Examiner.com “Long story short, we lost our lease,” Kathy told me in a phone interview this morning. “I don’t care to get into it more than that. It wasn’t an amicable breakup. But I’m determined to move the bar to a different location.”
“Sunday was Jack’s Backyard’s last day in business. Owner Kathy Jack says the building owners won’t renew their lease, and they’re not sure why, according to Pegasus News.”
It’s pretty clear why Custard spoke out, huh? And by the way, Marla is a member of “our community” too and deserves the same respect that Kathy Jack does.
“Kathy plans to turn the closing into an opportunity to make the bar bigger and better”
Ok. Really? How much bigger or better could it be? In every article I’ve ever read and from everything Kathy ever said, this was her dream. What changed so suddenly? It just doesn’t make sense. Sure it’s hard to run a business, but she signed up to do it and it didn’t work. No one forced her into it. Where is the accountability?
It’s great that Kathy Corbin writes and talks about how hard they tried and how much they loved it, but Kathy Corbin was not the owner and isn’t the person who borrowed huge sums of money, made false promises and refuses to be accountable for her actions. You can’t fix it for her Corbin. Maybe, as a friend, you should encourage her to do it for herself. And Jan, you were honorable in admitting that you tried and it didn’t work. Perhaps you can teach your friend Kathy about how to do the same thing.
So here’s my open letter to Kathy Jack,
Dear Kathy,
Come on. How do you plan to re-open a bar in a new location when you apparently have over a million dollars in debt and TABC has revoked (or will revoke) liquor license because of unpaid taxes? Why are you continuing to tell people what they want to hear instead of just telling the truth?
Here’s my suggestion for a possible statement. “I gave everything I had and tried to make it work, but in the end I was unsuccessful. I am sorry that the people who invested money in the business will not see it returned. I am sorry the patrons have lost the bar they loved. I appreciate the support of the entire community.”
Seems a little more honest, huh?
Blaming everyone else instead of just being honest and accountable for what happened isn’t working. Not returning calls to a newspaper with whom you have had a relationship for 30 years is not a good idea. Refusing to talk to your friends and be honest with people who gave you money to achieve your dream doesn’t make it better. That kind of behavior just makes people angry.
People can deal with the truth, but lying and covering up and making false statements is only going to prolong what is already a bad situation. The story has changed so many times already that it’s beginning to stink. First you blamed the accountant, then you blamed the landlord. Where is the truth? Friends can only make excuses and defend things they later discover to be lies for so long until they begin to turn on you. And sadly, friends are turning every minute that you avoid telling the truth and keep telling the lies.
Please just come clean and move on with your life. And while you’re at it, show a little gratitude for the people who supported you and back it up with some old fashioned honesty. Saying ugly things about the people who believed in you is just bad karma. You can move on, but only if you are honest. Otherwise you’ll be treading water in a muddy pool until you’ve really got nothing left. Save yourself. You can do it.
If Jack was negligent, then take it to court. Why entertain this kind of discussion? It is a waste of time and pointless. Businesses fail, investors assume risk, there is mismanagement and fraud int he world but is this the place to handle that? Half the information here is not based on fact, the other half is based on fact and all of it is to some degree subjective. People who are entitled to money won’t get their money back here, and this is not a court room, so get your evidence and go to an attorney to sue for any damages due to you. Isn’t that how grown ups do it?
Class acts; the lot of you. How infantile it is to slam someone in the comments section of a freaking rag. Have some class and take it private. You’re not winning any ratings or friends here.
It’s so easy to judge and speculate about a situation when it isn’t your money, your time, or your love that went into it. For those of you who know all the facts–stop airing your dirty laundry and stop slinging mud at each other–on a social networking site or through an article in The Voice. It’s sad it came to this…and futures are at stake here…
For those of you who do not know all the facts–it’s business. Why don’t you mind your own? Stop stirring the pot and perpetuating the drama.
And for the record, Kathy Jack is a pillar of our community. Do not forget all that this woman has done for the lesbian community. Her business failed. Period. Those investors knew the risk involved in opening an establishment such as this…and had Kathy Jack succeeded, you all would be singing her praises.
Kathy Corbin–thank you for bringing some respectability to this situation and taking partial ownership of it’s failure. It’s a sad situation for all involved. Have some respect for these people and for each other and just move on.
Agreed on the dirty laundry. This is making our community, especially the lesbian community look really, really bad. I sure hope lee patron has not made any mistakes in life, by the level of judgement that would have to be true, right?
So she did’nt take a salary or make any money herself,but she and Susie could afford to take a vaca to Mexico.just a couple of months ago.And she has lied her ass off from day one.All she had to do was say it did’nt work,sorry.
i blame george bush
McCrocklin: Just a note…it is far easier to stab someone in the back when they are down than to pull the knife out when they get back up…and Kathy and Susie will get back up.
Corbin: 99.9% of the community believe in Kathy, know very well how much of your hearts and souls you poured into Jack’s Backyard, and are heartbroken not just at the business loss but the personal loss you and so many others are feeling right now.
Jan: Whenever you are ready to give another “Loretta’s” a go, I am in 100%
Lee Patron: You sound like an asshole.
Kathy and Susie…you are both courageous and honorable people and I believe courage and honor win out in the end. I can only imagine how you both must feel.
Just wanted to make sure that the community doesn’t think the K.Washs’ comments were mine..It is a sad situation when your business plans and dreams do not work out. I have seen how hard Kathy and Susie have both worked to keep Jack’s Backyard vision alive. I appreciate the “vibe” that they created and will support them on their next endevour . They along an exceptional staff created an amazing place to hear live music, eat ,drink and socialize . Kathy Jack also always welcomed and supported numerous Benefits for all sorts of great causes…I give a big shout out of” Love and Thanks” to Kathy, Susie, Corbin and all of Jack’s Backyard staff.
I went one time. The place was laid out pretty cool. It was dead. They didn’t have the band playing that the website said would be there. The staff seemed uninterested. The food was good, but I didn’t feel very welcome. I am not a member of the LGBT community, so maybe I was being treated as an outsider, I don’t know. You can tell by the comments above that it was a ‘family’ venture, even if the family wasn’t blood related, there are emotions that go along with family when there is a problem that can lead people to say hurtful things. People react to stress differently ie. taking a vacation when the whole world is about to collapse around you, cleaning your house as the bank is foreclosing on you…
As someone who has owned their own business for over 20 years, running a business is a heck of a lot harder than it looks or sounds. Airing opinions and sides in a situation like this in a publication only does one thing – help sell papers.
Jack’s Backyard was always one of the first places to step up when a non-profit needed a great location to host a fundraiser, and I can’t even begin to guess how much money they helped raise for all of our communities – gay and straight. There are businesses closing their doors every day no matter for what reason because it’s just tough to run a business right now. Linen’s N Things, Borders… all of us are being affected by the economy on different levels. As someone who lives and runs a business in Oak Cliff, Jack’s will be missed and hard to replace. Thank-you to everyone who was involved for giving us some great memories.