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Adult businesses suing to get PPP loans. So far, the nightclubs are winning

Robert Channick, Chicago Tribune on

Published in News & Features

The appellate decision Wednesday not only allows the Milwaukee club to move forward with its PPP loan application, it lays the groundwork for how other cases in the region will be decided, according to Admiral attorney Lirot.

Meanwhile, the corporate owner of another Chicago gentlemen's club has secured millions of dollars in PPP loans -- by excluding its adult properties from the application.

RCI Hospitality Holdings, a publicly traded Texas chain, owns 40 upscale gentlemen's clubs, restaurants and bars, including Rick's Cabaret, formerly VIP's, on the city's Near North Side.

The company said it received $4.2 million in PPP loans for 10 Bombshells restaurants in Texas, $1.1 million for a "shared-services" subsidiary and $124,000 for a lounge.

"None of our adult nightclub and other non-core business subsidiaries received funding under the PPP," the company said in a May 11 news release announcing its second-quarter earnings.

An RCI spokesman did not return a request for comment.

RCI furloughed 1,900 workers as the COVID-19 pandemic brought operations to a full stop in March. It began reopening its Texas restaurants in May, but Rick's Cabaret in Chicago remains closed.

The Admiral, a former 1920s-era vaudeville house and longtime Northwest Side adult entertainment venue, could be among the last businesses in Chicago to welcome back customers under the state's five-phase reopening plan.

 

Entertainment venues can open with limited capacity in phase four, which would likely not come until at least the end of June, according to state targets. The Chicago area is currently in phase two, which reflects a flattening of the COVID-19 infection curve.

If the Admiral does get its PPP loan, the dancers will not necessarily benefit directly. Like many adult clubs, the Admiral treats dancers as independent contractors, not employees, and they don't receive paychecks, working primarily for tips and fees paid by customers.

Instead, the money would be used to pay the other staff at the Admiral as an eight-week bridge to reopening the club.

"The dancers would have the right to make their own application, since in the gig economy, they'd be the same as the Uber driver or the cosmetologist that owns her own chair," Lirot said.

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