An affiliate of Byndfit, a planned downtown D.C. fitness center that said it would “revolutionize” the industry, has filed for Chapter 11 bankruptcy amid a lawsuit filed by its Chinatown landlord that seeks to evict the tenant from the building and collect millions in what it alleges is unpaid rent.
BF Chinatown LLC, a Byndfit affiliate created to operate a location on the ground floor of Terrell Place, an office building at 650 F St. NW across from Capital One Arena, filed for bankruptcy protection Aug. 30 in the U.S. Bankruptcy Court in Alexandria, per court documents. It filed just before midnight Aug. 31, when D.C. Superior Court was scheduled to hold a hearing related to its landlord’s motion for damages and to reclaim the space, court documents show.
That location was to be launched in early 2020 as the first of several from the company and its co-founders, including Ryan Macaulay and Raymond Rahbar, according to a countercomplaint that BF Chinatown filed hours before it filed for bankruptcy protection. That plan hit delays due to the pandemic, per media reports.
Today, the building owner, an affiliate of Beacon Capital Partners called Terrell Place Property LLC, claims it’s owed more than $4 million in rent, related fees and other holdover costs, according to its Aug. 22 court filing. A Superior Court judge issued a protective order earlier in the year requiring BF Chinatown to begin making a series of payments into the court registry in order to remain in the space while the case was being litigated. Terrell Place claimed in court documents that the tenant had neither made those payments nor relinquished the space, and in mid-August, the court granted a motion imposing sanctions against the fitness firm for failing to comply with the court-imposed protective order.
“BF Chinatown refused to vacate the premises and to this day continues to enjoy the use of the premises without having made any rental payments to Terrell Place and without having made any protective order payments into the Court Registry,” James Sadowski, an attorney with Greenstein DeLorme & Luchs PC, who is representing Terrell Place Property, wrote in an August court filing.
In its Aug. 30 countersuit, BF Chinatown is seeking $106 million in damages and lost profits over its claims that the landlord didn’t fulfill its obligations to provide adequate HVAC services and Americans with Disabilities Act compliance to allow the gym to open.
Representatives for BF Chinatown and Beacon could not be reached for comment. Sadowski declined to comment further due to the pending litigation.
BF Chinatown listed Terrell Place among its top 20 creditors, but stated the claim was for $689,210, per its initial bankruptcy filing.
That’s the amount in unpaid rent that the landlord had sought in an earlier, related lawsuit filed in March 2021 against BF Chinatown, Rahbar, Macaulay, Macrolease Corp. and United Leasing Inc., all listed as defendants in that complaint. Macrolease and United Leasing were suppliers to BF Chinatown, though the pair were later dismissed as defendants in the case.
However, BF Chinatown later omitted Terrell Place from its list of largest creditors in a statement of financial affairs it submitted Sept. 28 to the bankruptcy court, in which it identified Rahbar and Macaulay as co-debtors. Rahbar, identified on that document as the company’s owner and CEO, is also listed as among BF Chinatown’s largest creditors, with an unsecured claim for $545,000.
Byndfit’s other largest claims from unsecured creditors, per its bankruptcy filing, are:
Of the entities on that list, AMC Building Group, BF Management and Iz Best Bro are listed as sharing the same Great Falls address as Rahbar. Further down in his financial schedules filing, however, Rahbar lists his mailing address as: “Unsure – been living in Airbnb/hotels.”
In all, Byndfit estimated in its initial bankruptcy filing that it carried both assets and liabilities totaling $500,001 to $1 million, though the Sept. 28 financial affairs statement lists $112 million in assets and $5.4 million in liabilities. In that more recent document, also under assets, BF Chinatown estimated $11.05 million as the value for its exclusive lease for the Terrell Place space for a lease term of 12 years.
The fitness company also listed as assets its $28.21 in total cash and equivalents currently in its checking account at Atlantic Union Bank; $500,000 in deposits and prepayments; $284,114 in office furniture, fixtures, equipment and collectibles; and the $100 million-plus it’s seeking in damages in its countersuit against its landlord, though that’s based on the presumption that BF Chinatown will win that case with the full amount of damages sought.
The ties between the landlord and tenant date back to November 2018, when BF Chinatown signed a lease for a little more than 22,700 square feet, at a rental rate starting at $70 per square foot, according to terms of the lease included in Terrell Place’s complaint.
The countercomplaint filed by BF Chinatown and Macaulay claimed Rahbar spent years researching and refining a business plan for Byndfit, which was to “revolutionize the fitness [industry] in a unique way.” The idea was to establish a series of company-owned and franchise locations, and the founders had “significant interest from third-party investors and lenders alike with all interested parties agreeing that the concept would be worth billions and valued it as such,” according to the BF Chinatown’s complaint.
But it appears that Byndfit never officially opened at Terrell Place, and a peek into the F Street NW building’s ground floor shows a darkened interior, strewn with construction material. BF Chinatown and Macaulay allege that Terrell Place failed to meet several conditions of the lease dealing with the building’s HVAC and air handling systems, per the counterclaim filed by Steven Freeman, an attorney with Freeman Rauch LLC who is representing the fitness company and co-founder. BF Chinatown asserted in its complaint that it was not due to begin paying rent until that work was completed — an assertion Terrell Place has disputed.
Instead, Terrell Place, in court filings, countered that BF Chinatown’s principals had signed off on several documents accepting delivery of the space, and that the landlord was under no obligation to make any changes sought by BF Chinatown as a precursor for rent payments. The fitness company was initially due to start paying rent in August 2020, under a lease term running through February 2031, according to Terrell Place’s complaint.
But after the pandemic hit, the landlord said in its complaint that it sent Byndfit a letter in April 2020, offering to abate two months worth of rent and push back the rent start date to November 2020. BF Chinatown never signed the letter, per Terrell Place’s complaint, nor did it respond in regard to a Covid rent relief application, a step that would have offered some protections under the District’s emergency legislation.
The landlord also said several contractors filed notices seeking mechanics liens for what they said was unpaid work in building out and furnishing the fitness center, including one in April 2020 from DFS Construction Corp., claiming it was owed $638,731, and another from Tri-Phase Services, seeking $198,070. In addition to alleged nonpayment of rent, Terrell Place claims in its complaint that BF Chinatown defaulted on its lease terms by failing to discharge some of those liens.
In May 2020, Terrell Place sent BF Chinatown the first of several notices of default, first for failing to resolve the liens and, later in October 2020, for failing to pay $114,436 in rent, according to its lawsuit. It said it held a Zoom call in January 2021 with Macaulay and Rahbar, who allegedly claimed he did not need rent relief, citing a “force majeure defense,” which refers to forces beyond its control that kept it from being able to open the business, according to Terrell Place’s suit. By March 2021, Terrell Place said it had sent a notice of the lease termination, effective March 16, 2021, along with its first lawsuit against BF Chinatown, Macauley and Rahbar for breach of contract.
Roughly 17 months later, at the end of August, BF Chinatown filed its counterclaim against Terrell Place, Cushman & Wakefield, and Beacon Capital Partners for breach of contract, intentional interference of business relationships, fraud and fraudulent inducement of contract. In that filing, it said it’s seeking damages worth $6 million that it said it spent to renovate the building space, and more than $100 million in lost profits. BF Chinatown had also claimed earlier in the litigation that it was protected from eviction by the District’s Covid-19 emergency protections, though those protections have since been lifted.
Complicating matters further still is a set of documents Atlantic Union Bank provided under subpoena to Terrell Place in early August, days before representatives for BF Chinatown filed a motion seeking to quash the subpoena as an “improper attempt to obtain commercial information not relevant to the merits of the case.”
Terrell Place’s subpoena covered BF Chinatown’s bank statements, copies of checks, federal Paycheck Protection Program loan applications and documents, and emails with Rahbar. BF Chinatown, or representatives for it, allegedly checked a box with each PPP loan application — it sought $662,155 in its first request in April 2020 and $384,400 in its second request — that indicated that it intended to pay rent with at least part of the funds it received, per court filings.
As part of those statements, the fitness company claimed annual “sales/revenue” of $84,500 and that it had 53 full-time employees, at an average monthly payroll of $264,862, according to the landlord’s Aug. 22 motion to oppose quashing the subpoena.
After BF Chinatown secured the PPP funding, Terrell Place said Rahbar allegedly wrote checks to himself or his affiliates totaling $431,585, according to its motion. The documents amount to “a treasure trove of impeachment materials vis-a-vis Mr. Rahbar,” Terrell Place wrote in its motion. “By way of example, the documents produced include payroll records that appear, at best, to be vastly overstated, and at worst, to be fraudulent.
“Put another way, Mr. Rahbar appears to have used PPP loan proceeds as a slush fund to pay himself and several entities that he controls at a time when BF Chinatown was indebted to multiple creditors, including Terrell Place,” the landlord stated in its opposition motion.
Rahbar and BF Chinatown had yet to file a response to those allegations, as of late Monday.
These lawsuits and BF Chinatown’s bankruptcy filing come nearly five years after Rahbar settled a contentious lawsuit centered on the now-defunct coworking company MakeOffices, which was tied up in a protracted legal battle that involved former EagleBank CEO Ron Paul.
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