Wilmington’s Sweet n Savory Cafe has closed its doors, following a Chapter 7 bankruptcy filing this week.

Owner Rob Shapiro confirmed the cafe’s closure in a text message to the Business Journal on Friday morning. Court records show that in October, the business voluntarily filed for Chapter 11 bankruptcy under the name SNS OG LLC. 

That filing was converted to a Chapter 7 status this week, which, Shapiro said, prompted the restaurant’s closure at 5 p.m. on Thursday. Chapter 7 bankruptcy allows for “the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors,” according to the U.S. Courts webpage.

On Friday morning a post to the restaurant’s Facebook page informed patrons that the business had closed “due to unfortunate circumstances.”

In a text, Shapiro said January was a “financially disastrous month” for the restaurant.

“Completely ran out of cash both in the business and personally,” Shapiro wrote. “SNS was a business model that required 2,500-3,000 guests per week. The best we were able to do after Covid was 1,500-2,000/week.”

In a Chapter 11 filing on Oct. 22, SNS OG LLC estimated its liabilities were between $500,000 to $1 million owed to between 1 to 49 creditors. In the filing, the limited liability company estimated its assets at less than $50,000.
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Top creditors include federal and state government agencies. SNS OG LLC owed $500,000 in payroll taxes to the IRS and $150,000 in sales and payroll taxes to the N.C. Department of Revenue, according to the initial filing.

An emergency motion filed Thursday converted the case from Chapter 11 to Chapter 7 bankruptcy. 

The filing cites an IRS claim filed on Jan. 13, that states SNS OG LLC owes more than $744,000, including unremitted unemployment and social security taxes from September 2022 through December 2024 along with interest and penalties.

The filing states that while SNS OG LLC collected the trust fund taxes included in the IRS claim, the company “did not remit those taxes to the appropriate taxing authority.”

Due to “the debtor’s defalcation with respect to the trust fund tax monies” the case was converted to a Chapter 7 status.

“The debtor’s need to defalcate these trust fund monies in order to maintain the operations of the debtor,” the claim states, “suggests the debtor is administratively insolvent and/or there is a continuing loss to or diminution to the estate.”

The filing notes priority and tax claims against SNS OG LLC total more than $682,000. 

“Assuming the debtor confirmed a plan today, the priority tax payment alone would be ~$11,981.00 a month,” the filing states. “Suffice to say, there is no possibility this debtor can propose a feasible plan.”

U.S. Bankruptcy Judge Pamela McAfee issued an order Thursday appointing Algernon Butler III, an attorney with Wilmington law firm Butler & Butler L.L.P, as an interim trustee.

Shapiro said the new trustee is looking to “potentially sell (the restaurant) as a functional business first.”

This isn’t the first time the restaurant, located at 1611 Pavilion Place, has had financial troubles. The cafe filed for Chapter 11 bankruptcy, which allows firms to reorganize debt and emerge financially healthy and able to pay creditors, in both 2012 and 2017. 

Sweet n Savory opened in 1994, according to its website, and served a breakfast, lunch and dinner menu. Shapiro opened a new culinary venture called Epicurean Grille nearby in 2017. The restaurant closed last year.

In a text, Shapiro expressed his appreciation for the area's support during the Sweet n Savory's time in business. "I am grateful and humbled by all of the support the community provided over these last 21 years," he wrote.