A defunct Chinatown restaurant was paid $900,000 by the City to vacate its space, after also receiving more than $25,000 in federal “paycheck protection” loans (which were later forgiven). The same business is now being sued by its former landlord for more than $400,000 in back rent, which (the landlord alleges) the restaurant failed to pay, at the same time it was receiving generous public subsidies from the City and federal governments.
The restaurant is Jaya, located at 90 Baxter Street, just south of Canal Street, which closed in December. A onetime favorite of Chinatown residents, who savored its highly regarded fusion of Malaysian, Thai, and Chinese cuisine, Jaya was a tenant of the Chung Pak Local Development Corporation, a non-profit that was created in the 1980s, when the administration of then-Mayor Ed Koch planned to demolish the notorious Manhattan House of Detention (more popularly known as “the Tombs”), and replace it with the current Manhattan Detention Complex.
The Chinatown community rose up in protest against this plan, but failed to stop it. The neighborhood succeeded, however, in extracting a significant concession from City Hall: the creation of 88 units of affordable housing for senior citizens adjacent to the new jail, along with 15,000 square feet community facilities, and half a dozen retail spaces — all overseen by Chung Pak.
It was in one of these retail spaces that Jaya opened in 2014. Three decades later, history seems poised to repeated itself, with the City once again planning to demolish an existing jail and build a new one at the same site, once again under the rationale of more modern and humane incarceration. Building this new complex (which is slated to begin in a few days) required demolishing the space occupied by Jaya, however.
This led City negotiators (who originally hoped to begin construction in January of this year) to begin bargaining with Jaya and its owner, Kam Chaw Boon, to leave the Baxter Street space several years before the expiration of the restaurant’s lease, at the end of 2024. Such an entreaty appears to have been fortuitously timed for Mr. Boon. In May, 2019, Chung Pak agreed to reduce Jaya’s base rent, from approximately $13,000 per month to slightly more than $12,000, apparently in response to financial distress being experienced by the restaurant, which had accumulated significant rent arrears. In order to obtain this concession (and the installment plan for repayment of back rent that accompanied it), Mr. Boon was required to sign a personal guaranty, making him directly liable for the restaurant’s debt, in the event that Jaya closed.
These developments were followed by the onset of the COVID-19 pandemic, which hit Chinatown especially hard. Many restaurants, including Jaya, closed for much of 2020. Even after restaurants began reopening, they were deprived of the tourist traffic and patronage by workers from nearby government offices (which were also closed) that Chinatown is dependent upon.
Federal databases show that, during the pandemic, Jaya received two loans from the paycheck protection program (PPP), in the amounts of $14,462 and $10,330, which were approved in May, 2020 and February, 2021, respectively. Both loans were later forgiven, meaning that Jaya was not required to repay them.
During this period, according to court papers filed by Chung Pak, Jaya continued to fall further behind on its rent. But then, in mid-2021, City negotiators approached Mr. Boon, offering to buy out his lease for the space at 90 Baxter Street. He ultimately negotiated a payment of $900,000, in exchange for permanently closing a money-losing restaurant that was, by then, more than $400,000 behind on its rent.
According to court papers filed by Chung Pak as part of a lawsuit against the restaurant and its owner, “Jaya vacated the leased Premises on December 28, 2021, surrendering the space and returning the keys to Chung Pak…. Jaya received $900,000 from the City of New York on December 31, 2021, as a result.”
The legal documents continue that, “due to the City’s urgent need to vacate Jaya from its premises in order to commence its construction work, the parties agreed that Jaya could vacate and surrender its space without waiver or prejudice to Chung Pak’s claims… for the arrears.” This means that Chung Pak was unable intercept the payment from the City to Jaya, and that Mr. Boon was allowed to accept the payment and close the restaurant without first repaying the back rent Jaya is alleged to have accumulated.
As a result, the court papers allege, “Jaya and Boon have failed to render adequate payments to Plaintiff to satisfy their Lease and Guaranty obligations in the sum of no less than $440,389.52.”
This appears to mean that the total benefit accrued by Jaya (about two-thirds of it at public expense) is $1,365,181.52.
A call requesting comment from Mr. Boon was not returned.
Matthew Fenton
