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Update: Could Union Trust be saved?

Updated post:

Union Trust - the swanky steakhouse at 717 Chestnut St. that's been in bankruptcy for nearly two of its four years of existence - appears to be done.

Foobooz reported Thursday that a sign on the door blames a plumbing problem for the shutdown, though state records show that the liquor license is inactive. There also are tax liens.

I have a call in to owner Joe Grasso, who regularly paints rosy pictures of the business.

One question would be: Why, since the liquor license expired Oct. 31, was Union Trust selling booze as recently as Sunday, Nov. 11?

But at least court records provide insight into Grasso's legal stragegy.

Whether Union Trust is truly finished is in the hands of U.S. Bankruptcy Court. Grasso asked the court recently to allow him - and he filed personally for bankruptcy protection earlier this year - to pay Union Trust's state tax debt. Paying the debt - and the court filing says it's $225,000 - will clear the liquor license and allow the restaurant to operate. A hearing is set for Dec. 11.

But why, you may ask, would Grasso want to keep the restaurant going?

For the answer, I refer to the same bankruptcy court filing, which indicates that the building is historically certified with the U.S. Department of Interior. Grasso's acquisition of the building came with certain, unspecified tax benefits that helped the seller, Sherwin Williams Co. (now a creditor of Grasso's). One of the conditions for the preservation of the historic-tax credit is that the building's "use as a restaurant remain for five years from its inception," Grasso's filing says. If the restaurant discontinues operation, the filing says, Sherwin Williams would lose the tax credits.

At that point, the IRS would go after Sherwin Williams, which in turn would go after Grasso.

Not being a lawyer, I cannot parse the definition of "inception" in this matter. But Union Trust, with a price tag of $12.8 million, opened Feb. 14, 2009.