Restaurant owner Fhima files Chapter 11

David J. Fhima, the Minneapolis-based entrepreneur with a string of failed Twin Cities restaurants that include Fhima's, Mpls. Cafe and Louis XIII, has filed for Chapter 11 protection under the federal bankruptcy law, listing debts of more than $2 million.

The Chapter 11 filing is the latest in a series of financial problems for Fhima.

A year ago, the restaurant bearing his surname closed in St. Paul after the city spent $700,000 to upgrade its leased location in the city-owned Lawson Commons retail space downtown.

In May 2007, the Minnesota Court of Appeals ruled that Fhima must pay a $352,612 judgment against him issued 13 years earlier in California.

The judgment came from a wrongful-termination lawsuit first filed in Los Angeles County Superior Court.

The Internal Revenue Service filed liens on two of Fhima's restaurants for $180,000 in unpaid federal taxes, according to a report last month in the Minneapolis-St. Paul Business Journal. The magazine said that in early May, a seafood supplier sued Fhima to collect on a $39,000 bill, and that Fhima closed his LoTo restaurant in St. Paul for six days in late May.

Neither Fhima, 47, nor his attorney could be reached Wednesday.

Other creditors include the state of Minnesota -- owed more than $100,000 in back taxes -- and individuals, including David Wicker of Grant, Minn., who is owed more than $1 million.

A document filed with the bankruptcy petition indicates that Fhima participated in credit counseling by telephone and over the Internet at 1:25 a.m. on June 25.

Individuals who file a Chapter 11 bankruptcy petition to reorganize debt repayments must show they have obtained credit counseling from a nonprofit agency, the document says.

Fhima has run several Twin Cities restaurants, including Zahtar at the Eden Prairie Life Time Fitness athletic club facility and open only to club members; Fhima's; LoTo; Mpls. Cafe, and Louis XIII.

Only Zahtar and LoTo remain in business.