The owners of a popular downtown music venue are being sued by their bank for defaulting on the loan they used to renovate the historic theater.
Paragon Commercial Bank claims the owners of The National Theater on East Broad Street owe it more than $8.8 million, according to a case filed June 1 in Richmond Circuit Court.
The National is owned by RIC Capital Ventures. Norfolk developer Joseph Mersel is also named individually in the suit as he personal guaranteed the original loan.
Bill Reid, one of the principal partners of RIC Capital Ventures, said that the business is doing just fine and that this issue is a result of bad timing. He said that the loan on The National had matured and that RIC Capital Ventures is looking to refinance the principal with another bank.
“The Paragon loan, which just recently matured was contemplated as a short-term loan to allow time to renegotiate for longer-term financing,” Reid said.
Raleigh-based Paragon announced June 2 that it was selling its Richmond branch to locally based Xenith Bank in a deal that is expected to be finalized over the next few weeks.
As part of the deal, Xenith will acquire $60 million in loans and assume $71 million in deposits. Paragon is exiting the Richmond market after just five years.
“Over the past several months, RIC Capital Ventures have been in serious discussions with other banks to refinance the loan over a more traditional term,” Reid said.
Reid said he is far into negotiations with one bank to refinance the loan.
“RIC Capital Ventures is dismayed that [Paragon] decided to take this approach. This is a simple issue of timing, which is expected to be revolved soon,” Reid said.
In 2005, RIC Capital Ventures purchased the theater, which was built in 1923, for $1.6 million. The Historic Richmond Foundation had previously saved it from demolition when it bought it in 1989.
When it debuted in 2008, The National was one of two new mid-size venues in Richmond, both in renovated historic buildings. Both sought to bring in acts that were too small for arenas but too big for small clubs. (The other venue was called Toad’s Place. Its owners were later locked out by the landlord and filed for bankruptcy. Another group reopened it as the Hat Factory.)
The National has become an established venue for local acts, as well as a destination for touring bands. It is known for its luxurious backstage, which includes a sauna, hot tub, laundry machines and a media room.
Other members of RIC Capital Ventures include Brad Wells of James River Entertainment, which books acts for the Snagajob.com Pavilion in Innsbrook among others. Mersel is a senior vice president with S.L. Nusbaum in Norfolk.
Renovations of the National cost about $15 million, and historic tax credits helped defray some of the expenses. The project received a state tax credit of $2.5 million and a federal tax credit worth about $2 million.
Paragon issued the $8.5 million loan to RIC Capital Ventures on April 5, 2007. The current principal is $8,811,415.62, plus $55,288.02 in interest and $13,366.20 in late fees.
Loan documents included in the case show that as part of a modification agreement made on October 26, 2008, RIC Capital Ventures agreed to make 11 consecutive monthly payments of $66,831 and pay off the remaining loan balance in one final payment on May 10, 2011.
Stephen E. Baril, one of the attorneys representing Paragon, said that the borrowers defaulted on the loan.
“The loan had become delinquent, and there did not appear to be any alternative under the circumstance but to pursue the claim and try to get the guarantor to pay it,” Baril said.
Baril declined to comment further.
The owners of a popular downtown music venue are being sued by their bank for defaulting on the loan they used to renovate the historic theater.
Paragon Commercial Bank claims the owners of The National Theater on East Broad Street owe it more than $8.8 million, according to a case filed June 1 in Richmond Circuit Court.
The National is owned by RIC Capital Ventures. Norfolk developer Joseph Mersel is also named individually in the suit as he personal guaranteed the original loan.
Bill Reid, one of the principal partners of RIC Capital Ventures, said that the business is doing just fine and that this issue is a result of bad timing. He said that the loan on The National had matured and that RIC Capital Ventures is looking to refinance the principal with another bank.
“The Paragon loan, which just recently matured was contemplated as a short-term loan to allow time to renegotiate for longer-term financing,” Reid said.
Raleigh-based Paragon announced June 2 that it was selling its Richmond branch to locally based Xenith Bank in a deal that is expected to be finalized over the next few weeks.
As part of the deal, Xenith will acquire $60 million in loans and assume $71 million in deposits. Paragon is exiting the Richmond market after just five years.
“Over the past several months, RIC Capital Ventures have been in serious discussions with other banks to refinance the loan over a more traditional term,” Reid said.
Reid said he is far into negotiations with one bank to refinance the loan.
“RIC Capital Ventures is dismayed that [Paragon] decided to take this approach. This is a simple issue of timing, which is expected to be revolved soon,” Reid said.
In 2005, RIC Capital Ventures purchased the theater, which was built in 1923, for $1.6 million. The Historic Richmond Foundation had previously saved it from demolition when it bought it in 1989.
When it debuted in 2008, The National was one of two new mid-size venues in Richmond, both in renovated historic buildings. Both sought to bring in acts that were too small for arenas but too big for small clubs. (The other venue was called Toad’s Place. Its owners were later locked out by the landlord and filed for bankruptcy. Another group reopened it as the Hat Factory.)
The National has become an established venue for local acts, as well as a destination for touring bands. It is known for its luxurious backstage, which includes a sauna, hot tub, laundry machines and a media room.
Other members of RIC Capital Ventures include Brad Wells of James River Entertainment, which books acts for the Snagajob.com Pavilion in Innsbrook among others. Mersel is a senior vice president with S.L. Nusbaum in Norfolk.
Renovations of the National cost about $15 million, and historic tax credits helped defray some of the expenses. The project received a state tax credit of $2.5 million and a federal tax credit worth about $2 million.
Paragon issued the $8.5 million loan to RIC Capital Ventures on April 5, 2007. The current principal is $8,811,415.62, plus $55,288.02 in interest and $13,366.20 in late fees.
Loan documents included in the case show that as part of a modification agreement made on October 26, 2008, RIC Capital Ventures agreed to make 11 consecutive monthly payments of $66,831 and pay off the remaining loan balance in one final payment on May 10, 2011.
Stephen E. Baril, one of the attorneys representing Paragon, said that the borrowers defaulted on the loan.
“The loan had become delinquent, and there did not appear to be any alternative under the circumstance but to pursue the claim and try to get the guarantor to pay it,” Baril said.
Baril declined to comment further.
The National is one of the best music venues I’ve ever been in. Tears for Fears was epic and Collective Soul elicited a trance-like vibe throughout the hall. Keep it rocking, guys.
Please, please don’t let us lose the National. It is one of the best things, if not the best thing, to happen to Richmond in the last five years. Go see Oscar winner Ryan Bingham tonight, YOU WILL NOT BE DISAPPOINTED.
I hope the National can clear this up. This is the best venue in town in my opinion.
Paragon is exiting Richmond after only 5 years-not surprising if this is their modus operandi with existing clients. Which banks out their aren’t working out re-fi’s and extensions in their portfolios?
The loan was originiated at $8.5 million on April 5, 2007. The current principal is $8,811,415.62, plus $55,288.02 in interest and $13,366.20 in late fees. Enough said.
The National is a very important part of our cultural renaissance. I hope that they can work it out!
It will be GREAT if The National closes– let em just run the Norva in Norfolk and give other venues in town some shows! … And I heard the hot-tub back there is disgusting.
@Jess – I think that you’ve got some of the cause/effect relationships confused here. The Canal Club and Alley Katz had their chances for YEARS without consistently bringing decent acts to Richmond. Toad’s Place flamed out due to their own financial issues. It’s because of the high quality of the venue that bands continue to come and play for big audiences. If The National were to close, you could say goodbye to the top-tier artists, too.