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This Legendary Chinatown Restaurant Owes $12M, Files for Bankruptcy

Hwa Yuan has filed for Chapter 11 bankruptcy after the pandemic hurt its ability to pay the mortgage; the restaurant remains open and is working on refinancing its debt.

The outside of a grand Chinese restaurant.
The exterior of Hwa Yuan Sichuan at 42 East Broadway in Chinatown.
Robert Sietsema/Eater NY
Melissa McCart is the editor for Eater New York.

The restaurant where the late Shorty Tang and his famous sesame noodles got started, Hwa Yuan at 42 East Broadway, at Catherine Street in Chinatown, filed for Chapter 11 bankruptcy. The October 30 filing is to halt the foreclosure on the restaurant which was scheduled for November 1, 2023. Listed as Q.Y Tang’s Hwa Yuan LLC, it is owned by Chen Lieh Tang, the 71-year-old son of the late Shorty Tang, who owes nearly $12 million on the property, according to the petition filed in Manhattan. The restaurant remains open.

Shorty Tang arrived in New York in 1963 and introduced New Yorkers to Sichuan-style sesame noodles, with the recipe imitated all over town; the original location of Hwa Yuan Szechuan Inn opened at 40 East Broadway in Chinatown in 1971; Tang died in 1976. and the restaurant closed in the ‘80s. The family bought the 42 East Broadway property, where Hwa Yuan now resides, after he died in 1979.

Chen Lieh Tang, who, last month, filed Chapter 11, ran several restaurants before retiring in 2012, to spend time in China, New York, and Taiwan, the New York Times reported in 2017. He eventually decided to get back into the restaurant business, opening Shorty Tang in Chelsea. That restaurant was followed by the return of Hwa Yuan on the same street as the original, in 2017, with a 250-seat dining room and 14 karaoke rooms upstairs in the former Bank of China building.

The building’s financial woes started well before the opening of the new location of Hwa Yuan, according to the affidavit. In 2012, the Bank of China broke its lease and vacated the building due to U.S. banking regulations, allegedly, “limiting the number of foreign branches it was allowed to operate.” Once it left, Chen Lieh Tang allegedly couldn’t find another banking tenant in the wake of the 2008 Great Recession.

Plan B was to revive the legacy of Shorty Tang. “His many signature dishes included the cold sesame noodle, a dish that has become ubiquitous, but rarely prepared in a manner worthy of his creation,” Chen Lieh Tang wrote in the affidavit. So he decided to “convert the space to accommodate a stylish restaurant where I could present my vision to the dining public,” as well as build out the top two floors into a karaoke bar that included 14 separate rooms, each with its own bathroom, music, microphones, and screens.

During the construction, Chen Lieh Tang contributed $10 million of his own money to the build-out of Hwa Yuan, he wrote in the affidavit, and with the delays and obstacles in the rebuild, they had to find a new lender and take on additional $7.35 million debt, according to the affidavit.

Hwa Yuan received many accolades when it reopened in 2017. “The place is palatial, with a vaguely Art Deco elegance,” Eater critic Robert Sietsema wrote of the space, calling the sesame noodles “superb” and noting the menu paired “old chestnuts” with “a sprinkling of more modern Sichuan dishes.”

In 2020, when COVID-19 hit, the restaurant’s business was decimated, with takeout only accounting for five percent of the building’s original pre-COVID profits, according to the affidavit. Yet once indoor dining began, it remained a culinary icon, “when former Mayor Bill de Blasio announced the return of indoor dining in New York City, he did so at Hwa Yuan with various other dignitaries,” Tang wrote in the filing.

A notice of default was issued in February 2020 by the lender, Owemanco Mortgage Limited Partnership, and mortgage foreclosure proceedings ensued. By March 1, 2023 the debt was recorded as $11,993,345.80. In the filing, Chen Lieh Tang noted that he has tried to refinance the loans — that’s still in progress — and that while he has other properties, including CLT 53 Real Estate Inc., and 243 Third Ave. Associates (98 Eighth Avenue), liquidating them is a bit complicated as they are co-owned with his wife, Margaret Chiang. One of them, at 236 E. 53rd Street, is listed for sale for $11.9 million.

The purpose of the Chapter 11 filing was a last resort, Chen Lieh Tang wrote in the affidavit. “We advised the lender’s counsel of this and requested that the sale date be adjourned to allow the loan to close.” That request was refused.

If the loan doesn’t go through, Chen Lieh Tang wrote in the affidavit, the restaurant would “proceed with alternatives,” and “the revenue that’s now being generated and projected to be generated from the restaurant and karaoke bar will be sufficient to pay off the lender.” In addition, should the loan not go through, the sale of the 53rd Street property, “would allow for additional optionality.” He continues, “It is hoped that the lender will cooperate in this endeavor, which is in its interests as well.”

Eater has reached out to Chen Lieh Tang as well as his lawyer, David Wolnerman of White & Wolnerman law firm.