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Economy & Business

Hofbräuhaus Owes Bank $21.7 Million, And Its Fall Closure Was Due To Unpaid Sales Tax

Royal Banks of Missouri is seeking a $21.7 million judgment against the developers of the Hofbräuhaus German restaurant and brewery in Belleville.
Belleville News-Democrat

BELLEVILLE — On the same September day the Hofbräuhaus in Belleville said on Facebook that it was closing temporarily because it was under new management, the Illinois Department of Revenue posted a warning sign on its door saying that the business’ certificate of registration was revoked for non-compliance with tax laws.

A Department of Revenue spokesman said the bright-green sign posted on Sept. 27 means a business can’t be in operation. Due to taxpayer confidentiality laws, state officials could not disclose details of why the Hofbräuhaus’ certificate of registration was revoked. The restaurant reopened less than a week later.

Royal Banks of Missouri alleges in a petition filed in St. Louis County Circuit Court on Dec. 2, seeking a $21.7 million judgment against the Hofbräuhaus developers, that they failed multiple times to pay restaurant sales tax when it was due, which resulted in the closure.

Update: New Shrine Restaurant Management Team Replaces Group From Hofbräuhaus

Royal Banks also alleges that the Hofbräuhaus owed $10,462 to the Department of Revenue on Nov. 18 and that the bank had to advance the German restaurant and brewery loan proceeds so it could make its payment to the state.

Matt Simmons, the new general manager of the Hofbräuhaus, could not be reached for comment. Last Tuesday, Dec. 10, he declined to comment on the Royal Banks case because he is an attorney for co-defendants.

Simmons said, after the restaurant closed, that it was to give new management time to revamp its menu and entertainment, and to correct issues with service.

The Hofbräuhaus reopened on Oct. 2 and held a grand-reopening celebration on Oct. 11. It has remained open since.

Sam Salustro, a spokesman for the Department of Revenue, said the department works with businesses to satisfy their liabilities, and once an agreement is reached, the business is allowed to operate again. Salustro declined to say when the green warning sign was removed from the Hofbräuhaus door.

This is a copy of the type of warning sign that the Illinois Department of Revenue said it posted at the Hofbräuhaus in Belleville on Sept. 27, 2019.
Credit Illinois Dept. of Revenue
This is a copy of the type of warning sign that the Illinois Department of Revenue said it posted at the Hofbräuhaus in Belleville on Sept. 27.

A certificate of registration with the state Department of Revenue allows a company to do business in the state as a retailer. The department uses the warning sign to let the public know that a company has had its certificate of registration revoked.

Petition filed

Royal Banks of Missouri filed a 60-page petition against the Hofbräuhaus and the companies created to develop and run the restaurant in an effort to get a $21.7 million judgment against them.

The late Chuck Keller of Effingham and his family developed the restaurant, saying it cost $12 million to build. Keller died in January on his 80th birthday.

Two of his sons, Christopher Keller of Effingham and Chane Keller of Belleville, and Chuck Keller’s wife, Doris Keller of Effingham, are listed as three of the 12 co-defendants in the petition filed by Royal Banks of Missouri.

The following allegations are included in the Royal Banks of Missouri petition:

  • The developers failed to begin construction of a hotel complex next to the Hofbräuhaus by April 1.
  • The developers failed to pay franchise fees of about $30,739 to Hofbräuhaus of America LLC in the third quarter this year.
  • The developers failed to pay $25,000 in ground rent for July 1 to Nov. 1 on the Hofbräuhaus site, which they lease from the religious order that owns the National Shrine of Our Lady of Snows, located across from the Hofbräuhaus on Illinois 15.

Royal Banks states that although it was not required to do so, it advised the Hofbräuhaus developers “of their numerous defaults” on “multiple occasions.”
Receiver appointed

As previously reported in the News-Democrat, a St. Louis County judge has granted Royal Banks of Missouri’s request to appoint a receiver who has “complete and exclusive control” over the business affairs for the Hofbräuhaus.

Royal Banks of Missouri filed for the motion as the lender to the Hofbräuhaus, which is listed in court records as the borrower.

William Guy Crouch was named the receiver, according to an order filed in St. Louis County on Dec. 6. Crouch could not be reached for comment.

Llynn K. White, an attorney for Royal Banks of Missouri, also could not be reached for comment.

Restaurant development

The Hofbräuhaus opened in March 2018, which was about two years later than the Keller family originally said it would open.

The city of Belleville spent $2.42 million to extend sewer lines to the development site. It also granted tax incentives worth up to $32.36 million to the Hofbräuhaus developers, but those incentives were based on future revenues and not paid up front.

Mayor Mark Eckert said Thursday the Hofbräuhaus has not yet filed to get any of the tax incentives.

The Keller family has said it would build hotels and other restaurants next to the Hofbräuhaus, but those projects have not started.

A St. Louis company has proposed to build a Zoom convenience store on a lot next to the Hofbräuhaus, and the city council will vote on the site plans.

Mike Koziatek is a reporter for the Belleville News-Democrat, a news partner of St. Louis Public Radio.

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