The Blue Paddle Bistro in South Hero, which abruptly closed its doors in August, has filed for federal bankruptcy.

Chef Phoebe Bright of South Hero, who is listed as the “sole member/manager,” reported the restaurant has $588,964 in liabilities and only $27,614 in assets, including $54 in cash, according to federal bankruptcy court records in Burlington.

Her longtime partner, Patience “Mandy” Hotchkiss also of South Hero, is listed as an “employee” in the federal court filing. 

Hotchkiss is listed later in the 49-page public filing as a potential creditor for a $23,494 loan that she provided the company, but also noted she may be a co-debtor for some of the business debts, the records show.

The bankruptcy filing was made by Afternoonies, doing business as the Blue Paddle Bistro, records show.  It was filed as a voluntary Chapter 7 bankruptcy, which provides for the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.

The restaurant, founded by Bright and Hotchkiss in March 2005, had become one of the top dining spots in the Champlain Islands.  Bright labored in the kitchen preparing meals, while Hotchkiss worked in the front of the two-story restaurant and was active on social media posting pictures.

However, the business had fallen on hard times in recent years.  During the recent summer season the main restaurant had limited public hours.   One listing showed the restaurant was open only four nights a week (Thursday to Sunday) for three hours each (from 5 to 8 p.m.).

Efforts to operate a second eatery called Blue Paddle by the Bay about a mile north lasted only for two summers (2021 and 2022). They said they closed to focus on the main restaurant.

About $300,000 of the bankruptcy debt is listed as loans that people and banks had provided the business through the years, according to the court records.

Bright also said in her court filing that the restaurant is owed funds from a former employee, “Paul Hendler, who embezzled from the debtor and was convicted of federal criminal charges.”  She wrote restitution “is received sporadically depending on Hendler’s employment status.”

Court records show Hendler was sentenced in federal court in Burlington to 3 years in prison in March 2024 and ordered to pay $80,000 to Afternoonies.  

The Islander was the first media outlet to report the closing in August and it came with no advanced public notice to their loyal customers.

There was no known chance for those with restaurant gift cards to redeem them.  Among the listed known creditors listed by Bright are some people that have turned to the Vermont Attorney General’s Office and the Vermont Labor Department to seek reimbursement for the restaurant gift cards.

Among the creditors are the Small Business Administration for $49,045 for a 2020 debt and the Vermont Department of  Taxes for $11,440 for this year.

Nate Hayward, the landlord, is owed $9,600 in potential rental arrears and he was still holding a $3,000 rent security deposit, Bright’s court filing said. It also noted the commercial lease had expired and the parties were operating month-to-month. 

Federal Court Clerk Jeff Eaton posted in the bankruptcy file that the deadline for most creditors to file a claim against the business is Dec. 15.  Government entities have until April 5, 2027, Eaton said in a signed order.

Bright has taken a job recently as a cook at a Colchester convenience store. Hotchkiss said after the restaurant closing on Facebook that she was looking for a part-time job.  Both worked a food booth recently during the 10-day Champlain Valley Fair