The owners of Circuit Night Club, a popular gay bar at 3641 N. Halsted St. in Boystown, announced early this week that the club’s recent and sudden closure will be permanent.
Owners Mike Macharello and Patrick Harms told BOI Magazine, an LGBT nightlife publication Macharello owns, that they’ve decided to part ways after nearly two decades of working together in the community’s entertainment scene.
But that’s not what Circuit’s main creditor is saying.
Boystown business owner Jeffrey Binninger said Circuit is closing because Macharello owes thousands of dollars in back loans made to the night club and the interest that has accrued on the money. He has served Macharello with court documents stating his intent to seize ownership Circuit, BOI Magazine and other personal and business assets, he told Chicago Phoenix.
Binninger, owner of Investure Corporation and web host Contax Communications said his lawsuit would proceed if Macharello does not repay his loans and interest owed within 30 days of being served. He would not disclose how much Macharello owes.
“This action is a direct result of Macharello’s decision to remove the business operating and liquor licenses from the premises,” Binninger said, referring to an incident on Halloween night. “By doing so, he forced Investure to accelerate the loan and seize assets.”
Macharello’s earlier claim that he had no choice but to close Circuit, due to financial stress caused by rent increases, is a lie, Binninger said.
“Sterling Properties has been more than willing to keep rent at a constant level and has not increased rent at the location,” Binninger said. “Macharello’s departure from Circuit is solely his decision.”
Binninger points out the language of his loan agreements with Macharello which names Investure as a “first position, secured creditor to all assets, both business and personal; as well as assets from any corporations, partnerships or other business operations, presently held or at any time acquired until the loan is repaid in full with interest.”
“This secured position includes Circuit Night Club, BOI Magazine, IRS Record Pool, and all other business operations with which Macharello has an interest, stake, shares or investment,” Binninger said.
If Macharello does not respond with a plan to resolve this issue, litigation that favors Investure would result in Binninger taking over all personal and business properties that Macharello owns. Any secured items, like club furnishings, computers and equipment, even rights to company names, would be sold to recover debt.
Macharello would no longer be able to use Circuit’s name and trademarks, BOI Magazine’s name, brand and assets. Investure could take any money Macharello makes, since closing Circuit, away.
Binninger wouldn’t be the first to take Macharello to court. Cook County Circuit Court documents show that the City of Chicago attempted to recover $22,500 in obligations related to the nightclub. Last year, alcohol distributors Wirtz Beverage Illinois and Judge & Dolph Ltd. sued Macharello to recover $11,463.66. A month later, electric company ComEd sued and won judgment against Macharello for $30,853.52.
Despite Investure’s planned takeover of BOI, Editor Rick Karlin noted the magazine is a completely separate entity from nightclub and therefore should not be a way to recover Circuit’s debts, according to the article announcing the club’s permanent closure.
Macharello intends to continue as its publisher.
“We have been in the process of heading in a new and exciting direction with the magazine for 2013,” said Macharello in the article.
Macharello’s business partner, Harms, the Northalsted Business Alliance president and Center on Halsted board member, stated an interest in opening a new club at the former Circuit location in future.
Speaking of his 34-year relationship with Harms — they first met at Hideaway Lounge and Night Club in suburban Forest Park –Macharello said, “We’ll continue to share a close friendship. We parted amicably. This business has been difficult on the both of us and we got through the worst of times together.”
Since the closure of Circuit, Macharello has worked to move popular themed events to other venues. Krush Night Club, 1675 N. Elston, now hosts Noche Latina while Evergreen 9 Vodka Lounge, 809 W. Evergreen, became the site of Noche Vaquera, La Noche Loca and Extrava-Ganza.
Macharello maintains he is “working with a few other club owners to keep the party going.”
On a new Circuit website, Macharello explains his need to continue a nightclub business.
“I envision a club with a conscience, a heart and soul, and one that gives back to its community. I strive to provide a club that not only looks good on the surface, but has substance and meaning behind it for all types of people regardless of age, race, gender, sexual preference, or social status.”
Macharello continued, “This has been a life-long mission of mine and I feel that all my efforts and accomplishments will be worth it along the way, and in the end. I have been fortunate enough to survive the many bumps in the road and I know that I couldn’t have gone this far without the many people who have helped me.”
Binninger has a portfolio of many Chicago-based businesses. He also owns Chicago Beef Entertainment and SinZation Male Revue.