Shilling Canning Co. seeks bankruptcy protection
An affiliate of The Shilling Canning Co. filed for Chapter 11 bankruptcy protection Tuesday after the Michelin-featured restaurant fell behind on rent for its Navy Yard space.
The filing comes nearly three months after the restaurant's landlord at 360 Water St. SE sued in D.C. Superior Court for nearly $93,906 in unpaid rent.
An attorney for Shilling Canning, Justin Fasano of McNamee Hosea PA, blamed the delinquent rent payments on declining revenue, a familiar story for many D.C. restaurants also grappling with increasing expenses. The restaurant's gross revenue fell from $1.5 million in 2023 to $1.38 million last year, Fasano wrote in a bankruptcy-related court document.
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In a statement, the company's owner and executive chef, Reid Shilling, said Shilling Canning has endured through Covid-19 pandemic and other challenges and is now starting to see a bright light with the return of office workers to the Navy Yard area. With the bankruptcy petition, he hopes to find a solution that builds on that momentum going forward.
"It's unfortunate we were not able to come to an agreement after we stayed current on our rent through almost 6 years of business in unprecedented times for our industry," Shilling said. "We are protecting the business and the team which allows us to restructure at a perfect time when the neighborhood has seen over 20K workers return, and the restaurant is performing better than it ever has. We look forward to serving our guests and neighbors, welcoming our regulars and new faces."
The LLC's bankruptcy petition, filed in the U.S. District Court for D.C., listed between $100,001 and $500,000 in assets and $500,001 and $1 million in liabilities.
Its largest creditor, with a claim of $148,649, is FC 1331 LLC, its landlord at 360 Water St. SE. The company's next two largest creditors are the D.C. government, owed $50,000 in sales and use taxes, and JPMorgan Chase Bank NA, with a claim of $22,843.
After a successful launch, Shilling told the Washington Business Journal in a September 2023 Small Biz Spotlight that figuring out how to evolve and continue to grow sales was its next challenge. Among its efforts was to bring back a pop-up concept, Ampersandwich, with the aim of eventually spinning the concept off to its own bricks-and-mortar space.
Most recently, the restaurant was included in the 2024 Michelin Guide, and one of its chefs, Sara Ravitz, was nominated for rising culinary star for this year's RAMMY Awards.
Fasano, in a related bankruptcy motion seeking to use cash collateral to pay ongoing expenses, said the company's profit-and-loss picture has begun to improve over the past few months as more workers have returned to the office, including federal workers ordered to return to the office five days a week. Several government agencies are based in the Navy Yard area, including the U.S. Department of Transportation, and their returns have fueled an increase in lunch meetings and happy hours.
The motion says the company is able to operate with positive cash flow while reorganizing its debts.
D.C.'s hospitality market faces an increasingly gloomy picture amid diminished sales and escalating costs for many restaurants. Roughly 44% of full-service casual restaurants in the District are likely to close this year as financial conditions worsen, per a recent survey from the Restaurant Association Metropolitan Washington.
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