ZenKitchen has “tentative deal” with tax man that could see it reopen in June

ZenKitchen has “tentative deal” with tax man that could see it reopen in June

But first, owner David Loan says he must fund-raise “tens of thousands” of dollars to pay tax arrears

IMG_4770 copyMAY 29 14 – 10:00 AM — ZenKitchen owner David Loan says today he has a “tentative deal” with Canada Revenue Agency that could see the popular high-end vegan restaurant on Somerset Street West reopen toward the end of June.

But he’s not out of the woods yet — not by a long shot.

The tentative deal involves raising considerable cash — he won’t say how much — to pay outstanding Harmonized Sales Tax, which led the tax man last week to obtain a court order to freeze the restaurant bank accounts. That was enough to force Loan to close on Friday after five years in business.

“This may be premature,” Loan says, “but we have a tentative deal with CRA.

“It means giving them a great amount of cash up-front, and so we’ll continue with fundraising activities over the next few weeks. But we’re hoping to be open before the end of June.”

In an interview minutes ago, Loan says he is encouraged by a groundswell of public support for his restaurant, which buttressed his resolve to try harder. He says four potential investors have also come forward with possible cash, although he would disclose no details.

As well, ZenKitchen executive chef Kyle Mortimer-Proulx is exploring the possibility of taking over assets in partnership with senior cook David Gick.

IMG_3226“We’ve had an appeal in to various levels at CRA over the last three days,” says Loan (photo, left).

“We’ve talked to various people there, and on Tuesday they asked me to make a proposal. Yesterday, our accountant and I had a serious discussion about whether we could put something together, and that proposal is dependant on us coming up with a considerable amount of cash up-front.

“It would be in the tens of thousands of dollars.

“There’s also a fellow in town who has started an online fund-raising campaign for $20,000, but that goal was not a number I gave him. So far I think they’re raised about $5,000.

“I’ve also had a number of potential investors come forward, and if we are successful with fundraising then we will be able to reopen in a few weeks. We haven’t set a fund-raising goal yet. I don’t want to get into dollar amounts, but we’ve had four people offer sums to us, some quite large.

“When you and I met on Saturday I had given up, quite frankly, and I felt completely defeated. It’s because some customers have been so supportive all on their own that I felt if they can step up to help then I’d better be able to do my part. It couldn’t have happened if customers hadn’t stepped up.

“So we are now in the early planning stages for some kind of fund-raising event, but we have no details. It would likely be a fund-raising dinner or other live event.”

ZenKitchen was the first of two high-end and critically acclaimed restaurants to close in Ottawa in the last week.

On Monday, chef/owner John Taylor announced he is closing Domus Café after 18 years to stop a hemorrhage of cash that was draining his personal financial resources. He cited very small profit margins, the poor economy, spiraling overhead costs, a brutal winter that kept customers home, changing consumer demographics in the ByWard Market, and intense competition as factors behind his decision.

Loan cited similar tight profit margins and a decline in business that led him late last year to dip into money earmarked for the tax man to meet payroll and pay his bills. Unfortunately, business did not improve much, and when CRA froze his bank account that forced his hand.

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