Raleigh’s Cafe de los Muertos to liquidate

The owner of Cafe de los Muertos is seeking to liquidate the downtown Raleigh coffee house through a bankruptcy petition filed this week.

The Chapter 7 bankruptcy filing brings the coffee house and roaster a step closer to resolving a pile of debt, including a loan from the mother of a former employee that resulted in the woman and her son filing a fraud lawsuit against the cafe in Wake County Superior Court.

This week’s bankruptcy filing doesn’t provide financial details, but it says the Hargett Street coffee shop has less than $50,000 in assets and owes between $100,101 and $500,000.

Owner Malcolm Cady or a representative is due in bankruptcy court March 21 to provide additional information to a court-appointed trustee. Cady’s bankruptcy lawyer, Jason Hendren, declined comment.

The cafe, which opened in 2014 and abruptly closed Feb. 5, was known for roasting its own coffee beans and its Day of the Dead-themed decor.

According to the bankruptcy filing, Cady owes money to real estate developer David Meeker, son of former Raleigh mayor Charles Meeker, and the nearby Crank Arm Brewing Co. Creditors also include several relatives, as well as Duke Energy, AT&T, Wells Fargo Bank, IRS and the N.C. Department of Revenue, among others.

David Meeker, 33, said he considers himself Cady’s friend and is not interested in recovering the $2,500 he loaned to Cady, knowing there was a good chance he wouldn’t get his money back. Meeker said Cady had a solid business model with Cafe de los Muertos but was saddled with bad loans at high interest.

“If he had financing it would have worked,” Meeker said.

Meeker was advising Cady and trying to connect him with bankers, but things didn’t work out.

“I was trying to be helpful,” Meeker said. “I don’t want to be paid back.”

Two of the individuals listed as creditors are Nathan Phillips and Evelyn Gay Niday. Phillips is the former employee who filed the fraud lawsuit, and his mother is Niday. According to their lawsuit, Cady approached Phillips about becoming his business partner in exchange for Phillips making a financial investment in Cafe de los Muertos. Niday withdrew $100,000 from her retirement account for an initial investment, with plans to invest more, but Cady fired her son and never repaid the money, according to their lawsuit.

Phillips and Niday sued Cady for breach of contract, unjust enrichment, fraud, negligent representations, unfair and deceptive trade practices and other claims. Their lawyer, Jeffrey Monroe, did not return a call seeking comment.

This story was originally published February 16, 2017 at 6:02 PM with the headline "Raleigh’s Cafe de los Muertos to liquidate."