Sept. 10 (Bloomberg) -- Tavern on the Green LP, operator of the 75-year-old restaurant in New York’s Central Park, sought bankruptcy protection after losing its lease on the city property to a higher bidder a month ago.

The restaurant’s name, valued at $19 million and in place since its founding by Parks Commissioner Robert Moses in 1934, now will be sold to the highest bidder in bankruptcy court, according to Keith Costa, a lawyer for the bankrupt partnership.

The lease for Tavern on the Green, the second-highest- grossing restaurant in the U.S. last year, had been held since 1974 by the family of Warner LeRoy, which owns the Tavern on the Green name. The city last month awarded the lease for 20 years starting at the end of Dec. 31 to restaurateur Dean Poll, who runs the Central Park Boathouse Restaurant.

Poll, who didn’t immediately respond to a call and e-mail seeking comment, will meet with representatives of the LeRoys later today, Costa said. If he is interested, then the name would be sold at auction to the highest bidder, he said.

The bankrupt partnership listed assets and debts of as much as $50 million each in a filing yesterday in U.S. Bankruptcy Court in Manhattan, with more than 200 creditors. It said it probably won’t have enough to pay unsecured creditors, after deducting expenses and exempt property.

Financial Crisis

“The filing was the result of two factors -- the extreme financial distress brought on by the current financial crisis and the City of New York’s decision not to renew our lease,” Tavern on the Green Chief Executive Officer Jennifer Oz LeRoy said in a statement.

The restaurant will continue to operate during the reorganization, she said. Discussions between Poll and LeRoy representatives include ways to keep operating after Poll takes over on Jan. 1 and begins to renovate, said Shelley Clark, a spokeswoman for Jennifer LeRoy.

“We’re working out those things,” she said.

Warner LeRoy, who died in 2001 at age 65 after creating New York restaurants such as Maxwell’s Plum, was the son of Mervyn LeRoy, who produced the 1939 Warner Bros. film, “The Wizard of Oz.” His granddaughter Jennifer will host the entertainment company’s gala celebration of the film’s 70th anniversary on Sept. 24 at the Tavern, according to Clark and a spokeswoman for Warner Bros.

‘Only Alternative’

Poll’s winning proposal for the restaurant included a $25 million investment in the historic building, with new slate roofs, kitchens and ventilation, electrical and plumbing systems, public restrooms, a bike rack and an outdoor cafe serving sandwiches and snacks, according to a statement in August by the city’s Parks & Recreation Department. The Boathouse, after a $4 million renovation, is one of the park’s top grossing facilities, it said.

“While the family is saddened by the need to seek court protection, we saw it as our only alternative given the current situation,” LeRoy said.

The New York Hotel Trades Council and Hotel Association of New York City Inc. Health Benefits Fund, Pension Fund and Industry Training Fund was named as Tavern’s largest unsecured creditor with a claim of $1.8 million, according to the bankruptcy filing.

The New York City Department of Parks is owed $76,923. Law firms Herrick Feinstein LLP and Kasowitz Benson Torres & Friedman LLP were also listed among the restaurant’s largest unsecured creditors in its court filing.

‘Fulfills Obligations’

The parks department wouldn’t comment on the bankruptcy filing because it hasn’t reviewed it, spokesman Phil Abramson said in a statement.

“We will ensure that Tavern on the Green fulfills all of its financial obligations to the city,” Abramson said in the statement.

Restaurants & Institutions, a publication that tracks the food-service industry, ranked Tavern on the Green as the second- highest-grossing restaurant in the U.S. last year, behind Tao Las Vegas.

Café des Artistes, an Upper West Side haunt of New York painters and literati, filed for Chapter 7 bankruptcy this week after closing down last month. The restaurant, open since 1917, attracted people attending theater, music and dance events at nearby Lincoln Center.

New York’s restaurant industry has endured an 11 percent sales decline over the past three months. This year, 512 New York restaurants have closed, after 684 closings in 2008, according to NPD Group, a market research company.

The case is In re Tavern on the Green LP, 09-15450, U.S. Bankruptcy Court, Southern District of New York (Manhattan.)

To contact the reporters on this story: Andrea Tan in Singapore at atan17@bloomberg.net; Christopher Scinta in New York bankruptcy court at cscinta@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net.

Last Updated: September 10, 2009 17:56 EDT

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