The Internal Revenue Service's back-taxes auction of Columbia Catering's perishables -- including Secretary of State George Shultz's favorite chocolate lace cookies, and canape's made for posh Washington parties -- was halted just six minutes before the sale was to start at 11 yesterday morning.
The stay came after Columbia filed at 10:54 a.m. for bankruptcy under Chapter 11. The IRS has yet to return Columbia's keys, waiting, according to an IRS spokesman, for an order from Judge Paul Mannes of Bankruptcy Court in Rockville. Robert Grossman, Columbia's attorney, said a meeting with the IRS is scheduled for this morning and the IRS "said they're bringing the keys."
Yesterday morning, a small crowd gathered on the balcony outside Columbia in the cold.
* Steven R. Ray, an engineer, said, "Columbia is supposed to do our wedding reception on April 6. I thought I'd better come over to see what was happening." Ray and his fiance', Barbara Chow, who is with the Senate Budget Committee, plan to marry in Rockville Civic Center. "We've already put down a $2,000 deposit," Ray said.
* William Seltzer, president of Columbia, arrived about that time and told Ray: "We'll be there. I guarantee it. Don't worry." He then went into his place to talk to the IRS agents in the hopes of getting his keys. "I'd like to be back in business tomorrow," he said.
* A vigil quickly developed with Columbia employes, including the twin chefs, Carlos and Antonia Laranjeira, coming up to see what was happening. "I'll have to look," said Carlos Laranjeira. "The strawberries may be all right -- they were very fresh, but not much longer. I don't think the 2,000 cookies could be served. They had to be left out on tables. The IRS wouldn't give us time, when they closed us down on Thursday, to properly put them up. All those cookies take so much time to make, the chocolate has to be spread by hand."
(At a State Department dinner party Friday night, Seltzer said, George Shultz's wife, Helena, who has a standing order for the chocolate lace cookies, took one bite of a substitute cookie and said firmly, "This isn't Bill Seltzer's cookie." After that, Seltzer told them for the first time that his premises had been padlocked by the IRS on Thursday. Ridgewell's took over his immediately scheduled parties, including two in the elaborately remodeled State Diplomatic Reception Rooms, but Seltzer supervised the events.)
* One man, who wouldn't give his name, said he was disappointed the auction was off. "I was hoping to buy some good food at a bargain."
According to IRS spokesman Domenic Laponzina, one of those who turned up yesterday morning was a representative of a linen company who had delivered some cloth napkins but hadn't yet been paid for them.
Before the auction was canceled, about 15 people, including one who allegedly nibbled at one of the cookies, toured the refrigerators and freezers, planning to bid on the goods.
Seltzer, who had been up all night with his attorneys filling out the bankruptcy forms, went home to bed.
"We're in a holding pattern," said Laponzina, confirming the IRS still has the keys. "The company is still under federal seizure and will remain so until further direction of the bankruptcy court. The court sits as executor. It's the court's prerogative to maintain the assets. The taxpayer always has the option of paying off the full amount or providing a surety bond. Even though the taxpayer has filed for bankruptcy, the liability continues to be owed."
Deanna Walker, Bankruptcy Court clerk, said of the delay in returning the keys: "We would've expected IRS to give back the keys, since when bankruptcy is filed, there's an automatic stay on everything. But I don't know IRS' procedure. Under Chapter 11, the company continues to do business and gives the court a plan for paying off their debts. They are permitted use of their assets."