As about 75 creditors of Potomac restaurant, the defunct Washington Harbour showplace, gathered in room 22 of U.S. District Court yesterday, they heard a classic explanation of a business gone bad.

"A simple case of not having enough operating cash, not doing enough business and the high cost of occupancy at Washington Harbour" -- that's how Alan Garmise, vice president of finance for LeRoy Productions, described the reasons the $12 million restaurant's owners filed for bankruptcy the day after Potomac closed in October. LeRoy Productions is the general partner of Cafe Partners, the restaurant's owner.

Revenue of about $9 million in its first year of operation was not enough for the glittery restaurant to break even, said Garmise, who added that projections for covering the restaurant's costs had been about $10.5 million a year. Contractors, vendors and employes of the restaurant are owed more than $1.8 million, according to court papers.

Garmise, who represented Warner LeRoy, owner of Maxwell's Plum and Tavern on the Green in New York and creator of Potomac, said the entrepreneur has not abandoned hope of reopening the restaurant. But he said that is a less viable option than selling the restaurant's 40-year lease, which Garmise said is Cafe Partners' greatest asset and virtually its only hope for paying its debts.

According to federal bankruptcy laws, Cafe Partners has 60 days from the time it files for bankruptcy protection to assume or reject the lease. If it assumes the lease, the landlord is entitled to an assurance that its investment will be protected.

Cafe Partners yesterday filed papers in D.C. Superior Court seeking to extend its deadline to sell the lease from Dec. 27 until the end of February.

Washington Harbour Associates, the owner of the complex in which the restaurant was located, has asked the court for permission to get the space back so that it can rent it to someone else. "I don't think {the restaurant's owners} are doing anything to relet the space," said Bradshaw Rost, an attorney for Washington Harbour. "We want the space occupied. ... It's hurting our other tenants."

Garmise said LeRoy had talked with several parties he would not identify who are interested in renting the space, although he said he did not know whether they had inspected the 20,000 square feet the restaurant once occupied.

The two entities have a major disagreement about what rent is owed for the space. According to court documents, Washington Harbour contends it is owed more than $78,000 a month in rent. But Cafe Partners has a $68 million lawsuit pending against Washington Harbour Associates, alleging that the landlord breached its agreement with the restaurant's owners by overcharging them hundreds of thousands of dollars for common area expenses.