While the economic world went about its business in 2006, none suspected they were inside a bubble about to burst. When it did deflate, so went the dreams, hopes and savings of many, down the drain. There were multiple victims to this housing bust, including commercial property, as evidenced this week by a hotel chain that is facing the loss of another property.
The manager of the former Doubletree property on NW 53rd street has 183 rooms and had been in deep litigation five years ago when a bank in Texas filed a foreclosure suit against the hotel parent company and a “managing member.” That individual is now facing a federal indictment.
After the Texas bank won a previous foreclosure judgment against the Boca chain, with mortgage interest and fees in excess of $25 million, the hotel was scheduled to be auctioned. But, the owner filed for Chapter 11 bankruptcy protection a day before the auction in order stop the foreclosure auction and an almost $37 million judgment.
Identifying unsecured claims were over $100,000. The parent company of the hotel chain had lost properties in Detroit, Pittsburgh and Palm Beach County.
The managing member is listed as the same person in the litigation two years ago. Although he was indicted in Chicago two years ago on federal fraud charges, he was allegedly also accused of misappropriation of funds on a charge related to the hotel loans in Pittsburgh and Boca Raton.
While the indicted individual’s criminal case is pending, the debtor’s legal spokesperson indicated the manager is out of the country,. Since he failed to appear at his court arraignment, he has been declared a fugitive by the federal court.
She has issued a statement that regardless of the charges, the hotel remains in good condition, and there has been interest by various outside groups to purchase it.
Regardless of what state you may live in, many homes and commercial businesses were lost during the mortgage crises several years ago. Foreclosures and bankruptcies are words that strike terror in the hearts of most people, but there are factors to consider on all sides of real estate issues. It is vital to make sure you have proper advice and professional care during all financial and legal aspects of any property transfer. Your financial present and future may depend on it.
Source:South Florida Business Journal, “Boca Raton hotel owner files Chapter 11 to halt foreclosure” Brian Bandell, Feb. 28, 2014