Bankruptcy court ordered DaBoyz rent be turned over to AEA

All rent payments made by DaBoyz Italian Cuisine have been credited to AEA Federal Credit Union as part of the Top of the Kress bankruptcy, but it took a court order.

The Yuma Sun recently obtained a copy of a court order filed April 7 in U.S. Bankruptcy Court, District of Arizona, in which Judge James Marlar ordered that “AEA has an allowed administrative-expense priority claim for all rent that the debtor has received for the property post-petition.”

The judge also ordered that Desert Best Enterprises LLC, “shall provide AEA Federal Credit with an accounting of all rent received since the debtor's bankruptcy petition for the property at 284 S. Main St., Yuma, Arizona, within 14 days following the entry of this order.”

Marlar's order was issued pursuant to AEA's motion to prohibit the debtor's use of cash collateral and for an accounting of the rent paid from the summer of 2010, when Desert Best Enterprises filed Chapter 11, until March of this year.

Desert Best Enterprises was formed by Frank Ruiz to purchase and renovate the historic Kress building and operate Top of the Kress, a nightclub on the upper floors. DaBoyz rents the ground floor. AEA was the lender for an estimated $10 million in loans for the property.

Desert Best Enterprises filed for bankruptcy on July 1, 2010. The rent paid by DaBoyz is part of the collateral held by AEA, and under the bankruptcy code can't be used by the debtor without permission.

The issue about the rental payments came to light last week when Christine Dawson, owner of DaBoyz, and her husband told local media they had heard that the rent paid by DaBoyz may not have been going to AEA.

Robert M. Cook, the attorney representing Ruiz and Desert Best Enterprises, said such reports were “utterly false.” An email from his office lists seven rent checks in the amount of $11,340 each that were made from March 30 through Sept. 22 of this year to AEA from Desert Best Enterprises through Cook's office.

In late November, Marlar issued an order dismissing the bankruptcy petition for lack of a viable plan of reorganization. With the property no longer under bankruptcy protection, AEA is moving forward to take possession of the Kress and begin seeking a buyer.

Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853. Find her on Facebook at Facebook.com/jlobeck or on Twitter at @YSJoyceLobeck.