More Than a Grain: Massive Debt Complicates SALT Dispute

Hundreds of thousands of RMB in unpaid bills are at the heart of a dispute over SALT, one of Beijing's most highly-acclaimed, non-Chinese restaurants.

Multiple food and beverage suppliers, speaking on condition of anonymity, told the Beijinger that they were owed as much as hundreds of thousands of RMB, and that those debts dated back as much as six months. At least one indicated their company had been repaid by former SALT manager Wang Xiubo, also know as Lucy Wang, who reopened the Lido-area venue on Monday under the name Salt Spring.

Wang first began working with SALT owner Gaby Alves as a waitress at Alameda in 2005, before moving with her when she opened SALT, she said.

SALT's Marketing Manager, Jennifer Eden, said by telephone Tuesday that "All restaurants have outstanding bills, usually three to six months, and we will agree to pay all of those." However, more than one Western restaurant manager contacted by the Beijinger said that 30 days was standard for payment terms with food suppliers in Beijing, and that terms of 90 days or longer are unheard of for a restaurant that size.

Via Eden, Alves said, "They have effectively stolen our business and are operating completely illegally," in an e-mail statement on September 8. "SALT is 100 percent owned by Gaby Alves. It is a wholly-foreign owned enterprise (WOFE)," said Eden on Tuesday in a telephone interview.

Wang claimed in an interview with the Beijinger on Tuesday that she both guaranteed loans for Alves and lent her additional funds totaling just under RMB 500,000. She quit SALT in February. Wang produced a raft of documents that purport to indicate rulings against Alves regarding the outstanding debts. Wang said that final repayment of the debts should have taken place by July 31, but that she did not receive any payments from Alves.

"When it came time for the rent to be renewed, we were told we would have to pay 12 months' rent plus a six-month deposit. Of course we cannot physically do that," Eden said. She accused Wang of colluding with Xin to get rid of Alves and her team.

Wang said that after Alves announced the closure of the restaurant, Xin and some former SALT staff reached out to her to reopen. Wang's intentions are to recoup her RMB 500,000 loan and the remaining money owed to suppliers.

"We just want to preserve what we did here at SALT," Wang said. "We need to support the people who rely on SALT for work."

Alves and Eden accuse Wang of illegally operating in the SALT space. "On Friday I saw that people were inside, I saw that people were inside wearing SALT uniforms. This is now a criminal offense to be using someone else's intellectual property, whether anyone owes money or not," Eden said.

Wang said that Xin is allowing her to operate without paying rent until the end of the month, in order for the restaurant to attempt to generate revenue.

Both sides acknowledge that SALT was closed in late August following a court order from the Chaoyang District Court. SALT announced August 27 that "After six great years at 9 Jiangtai Xi Lu in Lido, SALT restaurant is moving house. Several new locations are currently being considered, and I will keep you up to date via saltrestaurantbeijing.com and direct email," Eden said on the restaurant's website and via e-mail.

This is the second time in as many years that an Alves-owned venue has closed unexpectedly. Alves opened Terra in the Sanlitun former location of the Rickshaw in late 2010. Similar to SALT, Terra closed without prior announcement for renovations in November 2012, then announced in December 2012 that it would not be reopening, also citing a dispute with the landlord.

Legal resolution of lawsuits in China is a lengthy process, Stan Abrams, a Beijing-based lawyer for a software company and writer of the China Hearsay blog, said in a telephone interview on Tuesday. Creditors must first file a lawsuit against the company, individual or both, and convince the court of the merits of the case.

Creditors may also file to have company assets frozen at the time of the lawsuit, otherwise they risk that assets may be transferred or sold during the litigation process. Once a judgment is entered against the debtor, the creditors must then file to have the judgment executed, which would involve the court seizing the company and/or individual's assets, selling or auctioning off any property, and then distributing the proceeds and any other monetary assets to the creditors, Abrams said.

Given the length and complexity of the process, along with the resultant legal costs, many parties owed money prefer to negotiate a settlement or sometimes take matters into their own hands, Abrams said. The court would not, however, award a business's entire premises to a creditor and allow them to resume operations, he said.

Alves is still in China, Eden confirmed, but has not been seen in Beijing since late July. Eden said she was concerned for the safety of Alves, her staff and herself, as she had received threatening phone calls, including on Tuesday.

SALT Catering, Corporate and Food Services continues to operate as normal, having catered events for Brazil Culture Month as recently as last week.

On Tuesday, Salt Spring was offering a two and three-course menu for RMB 228 and 258, respectively, prepared by Chinese chefs. Wang said the menu represented selections of dishes prepared by all of SALT's previous chefs. When visited in the afternoon by the Beijinger, Salt Spring had no customers, but neither did Frank's Place, SALT/Salt Spring's downstairs neighbor.

The numerous awards SALT has won since since its opening in 2007 remain hanging along the staircase ascending to the restaurant. Most recently, it received Outstanding Restaurant of the Year (Non-Chinese, Fine Dining), Outstanding Best Chef (Fine Dining), for Paulo da Sousa, Outstanding Best Personality (Fine Dining) for Gaby Alves, Outstanding Best Steak (Fine Dining), and Outstanding Best Value (Fine Dining) at the the Beijinger 2013 Reader Restaurant Awards.

Disclosure: SALT is a former advertiser in the Beijinger magazine.

Photo: the Beijinger.