Hartsdale Szechuan restaurant petitions for bankruptcy protection
A Hartsdale restaurateur has petitioned for bankruptcy protection while blaming two former employees for his business troubles.
Fantasy Cuisine Co., 20 N. Central Avenue, declared $91,400 in assets and $312,000 in liabilities, in a Chapter 11 reorganization petition filed on June 24 in U.S. Bankruptcy Court, White Plains.
“The debtor’s financial predicament was caused primarily by a Fair Labor Standards Act lawsuit commenced by two former employees,” Chu declared in the Fantasy Cuisine case.
The following day, owner Chia-Hung Chu, of Scarsdale, petitioned for personal bankruptcy protection, claiming $29,236 in assets and $600,095 in liabilities.
Fantasy Cuisine specializes in Szechuan cuisine, according to the petition, and has operated for about ten years. Chu also owns Dumpling Plus Noodle restaurant on Palmer Avenue in Bronxville, but it is not part of the bankruptcies.
Chu, also known as Austin Chu, blames former dim sum chefs Bing Wang and Yan Qiu Zhang for the Fantasy Cuisine bankruptcy.
He says the restaurant owes Wang $24,494 and Zhang $129,997, in the Fantasy Cuisine petition, and he owes them $300,000 each, in his personal bankruptcy petition.
Wang and Zhang sued Chu and Fantasy Cuisine in 2020, in U.S. District Court, Manhattan. Wang claimed he worked 61 hours a week but never received overtime compensation or paystubs. Zhang said she worked six days a week, was paid a fixed wage regardless of the hours worked, and never received overtime compensation.
She also alleged that Chu “rebuffed her complaints about the sweatshop-like, onerous work conditions which included pervasive rodent infestation and rodent feces in the work area.”
Chu described Wang as a highly specialized gourmet dim sum chef who was exempt from labor laws, in his answer to the complaint. He depicted Zhang as a manager and “number three in the organizational hierarchy” who supervised Wang and was in effect a co-employer under federal labor law.
“To the extent that there was ‘sweatshop-like work conditions’ in the Dim Sum Department,” he stated, “the same was created by plaintiff Zhang as its manager, and [he and the corporation] were not aware of such conditions.”
A five-day trial was held this past May, and the jury ruled in favor Wang and Zhang, finding that Chu and Fantasy Cuisine had failed to act in good faith regarding overtime wages and wage statements.
Meanwhile, Wang accused Fantasy Cuisine of submitting fraudulent tax information to the IRS, in a class action lawsuit filed last year in White Plains federal court.
He claimed that the restaurant did not withhold wages for paying federal and state income, Social Security and Medicare taxes, thereby increasing his tax liability and jeopardizing his benefits.
Chu responded that Wang insisted on receiving payments partially by check and partially by cash, so as to qualify for Medicaid benefits, and that the restaurant paid its share of Wang’s Social Security and Medicare taxes.
“No tax withholdings were deducted from his pay, as per his request,” Chu stated in an affidavit. “He declined to fill out a W-4 form and insisted that only his check payments be reported to the Internal Revenue Service.”
The case in pending.
Fantasy Cuisine made $1.8 million in 2022, $1.7 million in 2023, and $650,000 as of filing for bankruptcy.
Chu says he earned $83,000 in 2022, $72,000 last year and $33,066 as of filing for personal bankruptcy.
He said his goals in the Fantasy Cuisine bankruptcy are to remain operating without interruption, preserve business interests and present a plan that will satisfy all creditors.
He is represented by White Plains attorney Anne Penachio.