Actors, politicians fighting to save iconic NYC theater facing bankruptcy auction

To hear Lorcan Otway tell it, he’s in a fight for his life.

If he finds someone willing to refinance his debt, Theatre 80 — the iconic East Village venue where Otway has lived and worked since he was 9 years old — will be saved.

If he doesn’t, the off-Broadway theater where “You’re a Good Man Charlie Brown” was born and countless stars have thrived will likely be sold at bankruptcy auction to the highest bidder.

Otway is facing nearly $10.5 million in debts after COVID shutdowns left him unable to pay a loan.

“[The creditors] are literally trying to take away everything I have ever done and everything I ever will be,” said Otway, 67, of the theater, pub and museum that are his life’s work as well as his home. (He and his wife Genie, who is in her 60s, live in a an adjacent townhouse that is also part of the bankruptcy.)

On July 21, a judge will decide whether to convert Otway’s Chapter 11 bankruptcy, filed in December 2020, into Chapter 7 — which will most likely end in an auction. Neither the court-appointed trustee nor her attorney returned calls seeking comment.

As Otway scrambles to find financial help, politicians and celebrities are rallying to his cause.

Among them is Malachy McCourt, the Irish actor and bestselling author of “A Monk Swimming” who is a longtime friend of the Otway family. Last month, the 90-year-old became the latest star to add his handprint and signature to the Walk of Fame outside Theatre 80.

“I’ll be planting my hand in the cement,” McCourt told The Post before the ceremony. “I wish we could cut the hands off the money grubbers who are trying to steal the place. It’s terrible what is happening to Lorcan.”

After filing for pandemic-induced bankruptcy in 2020, and with a $6.1 million loan in default, Otway’s debt on the adjoined buildings was sold to Maverick Real Estate Partners and the interest rate soared.

Otway believes the mobsters who helped finance his father’s acquisition of the former jazz club and speakeasy had more compassion for the neighborhood than today’s “real estate vultures.” 

His dad, Howard, used a $64,000 loan from a Lower East Side mobster to buy the two adjoined buildings at 78 and 80 St. Marks Place in 1964.

“The difference between organized crime then and real estate predators today is organized crime charged lower interest rates,” Otway said. “They wanted you to succeed to stabilize the neighborhood. The real estate predators today are parasites. They are killing New York’s cultural entities. We don’t need more banks and Starbucks. We need more theaters.”

The spot had once been a speakeasy where Al Capone drank. It was one of the first places Frank Sinatra performed, in 1939, while renting a room around the corner. Harry Belafonte was a regular in the 1950s, when it was the Jazz Gallery.

After his dad bought it, “[We] dug out the stage by hand when I was 9 years old,” Otway recalled, explaining why an old door is now a few feet above the floor level of the stage. “That [door] was the only way in during Prohibition when it was a speakeasy,” he said. Patrons had to enter a butcher shop on First Ave., ask to go to “Scheib’s place” and then cross a back alley to get to a tunnel leading to the speakeasy’s back door.

Otway recalled his dad uncovering two safes buried in the basement. Walter Scheib, the mob underling who had sold the former Jazz Gallery to Howard, claimed the safes belonged to him and that he had forgotten the combinations. A safe cracker was brought in and discovered one was empty — while the second contained $2 million in gold certificates, wrapped in newspapers from 1945.

The Otway family did not get a cut of the recovered loot, but they eventually learned that the money belonged to Scheib’s boss, Frank Hoffman, who made a fortune as a bootlegger during Prohibition.

Hoffman had disappeared in 1945 with his Brazilian girlfriend and was presumed long dead. So Scheib used the money to retire and build the Promenade Hotel in Miami Beach. (Otway has written a book and movie treatment based on it, but said, “I don’t want to give too much of the story away.”)

Otway has lived there since his father bought the place and moved the family into the attached townhouse.

Growing up, Otway worked as an usher, concessionaire, projectionist and handyman. “My dad had me start on the ground level of every job and work my way up to management at each,” he said. 

The walls of the theater are lined with Otway’s memories: Posters from past shows, as well as photos of the stars who were in them or were pals with his family: Katharine Hepburn, Robert De Niro, Jimmy Stewart, Claudette Colbert, Bette Davis. Another picture shows Howard holding up a tipsy Maureen Stapleton leaving her handprint in wet cement for the Walk of Fame. As Otway recalled, the Oscar-winning actress was too inebriated to sign her name.

Others whose handprints and signatures made it onto the sidewalk include Joan Rivers, Joan Crawford, Gloria Swanson and Alan Cumming. The actor who played Radar O’Reilly in “MASH,” Gary Burghoff, also left his mark, but it’s set in a cement block that has yet to be set into the sidewalk. “He hates coming to New York, so we had to bring the cement to him,” Otway explained.

One of his favorite stories is from 1969, when “You’re a Good Man Charlie Brown” was drawing an A-list crowd to the way off-Broadway venue.

A young Billy Crystal was working as an usher and spotted legendary newscaster Walter Cronkite sitting in the front row. Crystal raced up to Cronkite, shining a flashlight in his eyes. “Mr. Cronkite, if there is anything I can do for you, anything at all, just let me know,” he said enthusiastically. 

“One thing you can do for me is get that f–king flashlight out of my face,” Cronkite retorted.

Years later, after Crystal had become a star himself, he ran into Cronkite on a talk show. The newsman reportedly remembered the encounter and said he always regretted speaking so rudely to a young usher.

More recently, Otway was there when British actor Patrick Stewart made a surprise appearance seven years ago with the Improvisational Shakespeare Company. He also recalled John Lithgow and Emma Thompson filming scenes for the 2019 movie “Late Night” at the theater.

Howard died in 1994 at the age of 72. Otway’s mother, Florence, was 94 when she passed away in 2014.

“They died at home and we took care of them through their final illnesses,” said Otway referring to himself and wife Genie, a lawyer. (The two have no children.) The buildings went to him and his older brother, Thomas, who has since passed away.

After attending law school at night, Otway worked for a decade as an attorney, mainly focusing on human rights — which he said was rewarding, just not financially. The theater has always been his passion and he returned to it full time in 2006.

In 2019, Otway took out a $6.1 million bridge loan to pay off his late brother’s estate to the tune of $2.8 million and invested funds into the establishment. He said he was meeting his payments to the lender on time — until the pandemic hit.

The 200-seat theater, as well as the buildings’ William Barnacle Tavern and the Museum of the American Gangster, which Otway also runs, were forced to close. Some commercial rental units stopped paying rent. With no real income for Otway, the loan went into default and the original lender, Hirschmark Capital, sold the bank debt to Maverick Real Estate Partners. Neither the firm’s principal David Aviram nor his attorney returned calls seeking comment.

But Otway said that, with the loan in default, his interest rate was jacked up from 10% to 24% in early 2021 — and the original $6.1 million bridge loan ballooned to more than $9.2 million with penalties rapidly accumulating.

In December 2020, Oway filed for Chapter 11 bankruptcy, which he hoped would buy time to find a lender for a new long-term mortgage and enable him to pay off his debt, including a six-figure property tax bill. 

“Bankruptcy laws are supposed to help businesses to get time to reorganize. Instead they are being used to ruin me,” said Otway. “It was illegal for me to evict any of my tenants during the COVID shutdown. For the public good, I was not allowed to do any business. But Maverick was allowed to continue to do business by buying the debt, and now they want to evict us.”

Sen. Brad Hoylman urged Governor Kathy Hochul to guarantee a low-interest loan for the struggling business, to no avail. “It was the same week she had okayed $840 million for a billionaire to build a new football stadium in Buffalo,” Otway said.

Carlina Rivera, the City Councilwoman from the Lower East Side who is running for Congress, told The Post she came to know Theatre 80 as a high-school student when she saw a production of “Romeo and Juliet.” She’s now hoping to help save it.

“It sparked a love for the performing arts that I have to this day,” Rivera said. “As an elected official I’ve worked to connect [Otway] with resources at the City, State and Federal level, and my office has worked to support them with guidance around mission-driven financing options. I hope that we can continue to call Theatre 80 our neighbors, and I will certainly keep fighting to support our beloved arts and cultural institutions.”

Otway said that unless he can find a new backer in fairly short order, the theater, pub and museum could be forced to close its doors — and he and his wife will be evicted from their home if the July 21 court session sets a date for a forced sale. 

He added that he has recently gotten an expression of interest from a potential lender but realizes time is not on his side. 

“This is a New York cultural institution,” Otway said as he looked over the bar that was carved from the one in Schreib’s speakeasy. “I hope it survives.”