McHenry D.C. Cobbs liquor license reinstated as co-owners settle court disputes with buyout

Alcohol service resumed 3 p.m. Thursday at D.C. Cobbs in McHenry, a week after the city suspended its liquor license amid court battles between its two co-owners

With the city’s reinstatement of the liquor license following a hearing Thursday, the two men who each held 50% of the restaurant’s underlying corporation were set to drop competing lawsuits they had filed against each other.

The settlement was reached as one of them, Josh Carstens, agreed to take a buyout, his attorney said. That would leave D.C. Cobbs in the hands of Dan Hart, a former Woodstock City Council member, Hart’s attorney confirmed.

Carstens agreed to get paid “meaningfully less” than 50% of the $3.3 million the restaurant was valued at by an accounting firm recently, his attorney Troy Owens said.

“This was the only way the liquor license could get reinstated,” said Owens, who declined to specify a dollar figure for the settlement. He said Carstens wanted the restaurant workers to remain employed and not lose their jobs.

The two have lawsuits pending about the liquor license, withdrawals Carstens made from the business bank account and the right to use the D.C. Cobbs brand and intellectual property like its recipes. Those lawsuits are still in court but Owens said the attorneys for both men are requesting they get dismissed as part of the settlement.

The city suspended the restaurant’s liquor license after Hart informed local officials he no longer was acting as the liquor license agent as of July 25, although it didn’t require renewal until spring next year.

Because Carstens lives in Arizona, there was no agent for the business residing within 10 miles of McHenry, violating city rules, the city said.

In the city’s liquor license suspension notice, it also alleged D.C. Cobbs violated other state and local rules by staying open past 1 a.m. one night last week, which is illegal Monday through Friday in McHenry, and serving a minor alcohol in late June.

Owens had alleged in court documents Hart was trying to “sabotage” the restaurant by informing the city he was not acting as an agent for McHenry Cobbs.

Hart did not respond to requests for comment this week. His attorney, Robert Hanlon, in a brief interview declined to comment on the lawsuits beyond confirming a settlement between the two had been reached.

Court records show Hart was not satisfied operating the restaurant without a new deal between the McHenry Cobbs corporation he and Carstens owned jointly and 222 North Main Street, a business solely controlled by Hart that owns D.C. Cobbs logos and other intellectual property .

A licensing agreement between the two entities expired without renewal July 25, leading 222 North Main Street to file a trademark infringement lawsuit in federal court against McHenry Cobbs. The agreement would have required McHenry Cobbs, the owner of the restaurant, to pay 3% of its gross sales to 222 North Main in the event Hart ever owned less than 50% of McHenry Cobbs.

Carstens had challenged the legality of the licensing agreement in McHenry County court before it expired, but was unsuccessful.

“Josh made a compromise of his value of his 50% stake in the company to make sure the employees remained employed based upon the reinstatement of the liquor license,” Owens said. “Obviously he wishes the business and especially the employees he feels loyal to every blessing, every good turn and good health.”

Carstens confirmed that was the case in a text message, but declined to comment further.

The punishment related to the alleged city liquor violations at D.C. Cobbs included a suspension for the days the restaurant was unable to serve alcohol this past week. The suspension was considered already served as of Thursday afternoon, officials at the Liquor Commissioner hearing said.