Vaughan catering company sues NHL bubble residence Hotel X for $60M

By Peter & Paul's alleges it was tossed for company with hockey ties

Yorkregion.com
September 3, 2020
Josh Rubin

When Kevin Lee heard rumours the NHL was bringing its playoff bubble to Toronto and that some teams would be staying at Hotel X, he breathed a sigh of relief.

The 32-year-old assistant restaurant manager assumed it meant he’d be going back to work at the hotel on the CNE grounds with his company, By Peter & Paul’s, after sitting idle since the hotel was shut down March 23 because of the global COVID-19 pandemic.

“I started hearing from a few other friends in the industry that the NHL was coming to Hotel X. I got excited. I thought it was a good score,” said Lee.

Instead, along with more than 200 colleagues, Lee is now looking for work after Hotel X terminated the lease of By Peter & Paul’s, the catering and entertainment company that had run food and drink services since the hotel’s launch in 2018. The catering company issued official termination notices to Lee and its other hotel staff in early August.

By Peter & Paul’s is now suing Hotel X and its owner, Princes Gate Hotel LP, for $60 million, claiming its lease for running two restaurants and a catering kitchen was terminated unfairly. PGH is controlled by New York-based hotel entrepreneur Henry Kallan. The suit also says Hotel X replaced the caterer with Harlo Entertainment, a Toronto-based company that also owns a minority stake in the NHL’s Pittsburgh Penguins.

Through a spokesperson, Hotel X denied that it had done anything wrong.

“Hotel X Toronto’s actions were in compliance with its contractual commitments and all applicable laws. Since these matters are in litigation we are unable to comment further,” said the statement.

Hotel X and its owner have until Sept. 4 to file a defence to the suit with the Ontario Court of Justice. None of the allegations in the suit have been proven in court.

By Peter & Paul’s president Peter Eliopoulos said he was stunned when his company’s lease at Hotel X was terminated for nonpayment of rent.

“I’m devastated, most of all for my employees. It would have been packed in there,” said Eliopoulos, who’s been in the catering and restaurant business for 38 years. Given that the restaurant and catering industry has been hammered by COVID-19-related restrictions, Eliopoulos said he had no choice but to issue termination notices to his employees who’d been working at the hotel -- there wasn’t anywhere in his company to put them.

Eliopoulos said his company paid Hotel X full rent for March, but acknowledged not paying rent since then because the hotel had been closed. Once Ontario entered Stage 2 and allowed for takeout food sales and patio dining, Hotel X still didn’t allow his restaurants to open back up, Eliopoulos said. Nor, according to the statement of claim filed by Eliopoulos’s company, did Hotel X apply for the Canada Emergency Commercial Rent Assistance program designed to help small businesses pay their rent during the pandemic.

The lawsuit claims Hotel X’s owner was motivated to replace By Peter & Paul’s because of Harlo’s links to the NHL. In addition to catering and restaurant operations, Harlo Entertainment also owns a minority stake in the NHL’s Pittsburgh Penguins and Overactive Media, which controls two Toronto-based sports franchises. Harlo Entertainment is a subsidiary of Harlo Capital, a real estate private equity firm founded by Toronto’s Jeffrey Kimel.

“PGH’s plan to replace PNP with Harlo Entertainment was for the purpose of leveraging Harlo Entertainment’s connections with the National Hockey League and the e-sports industry,” the suit alleges.

The Penguins, since eliminated from the NHL playoffs, were one of several teams hosted at Hotel X. Earlier in the playoffs, several other teams had been staying at the Fairmont Royal York.

The suit also says Hotel X had been in negotiations for months with Harlo about taking over food and beverage services at the hotel, and plans for an e-sports arena near the hotel.

Neither the NHL nor Kimel responded immediately to questions about whether the league’s choice of Hotel X was contingent upon Harlo getting the food and beverage contract at the hotel. Nor did the NHL respond to a question about whether it was aware of discussions between Hotel X and By Peter & Paul’s.

Eliopoulos said having his lease terminated was especially frustrating after repeated construction delays and fewer than expected customers at the hotel. He also estimates he spent $11 million of By Peter & Paul’s money in construction and other costs for the two restaurants and catering kitchen.