The Comfort Suites City Centre on the southwestern fringe of downtown Indianapolis that filed bankruptcy earlier this year could be handed back to its largest creditor.
The owner of the Comfort Suites City Centre, Warsaw Hotel Partners LLC, is an affiliate of Dora Brothers Hospitality Corp. in Fishers. Dora Brothers operates 18 hotels in Indiana under various flags, including 10 in the Indianapolis area.
Warsaw filed for 11 bankruptcy petition in February. Court papers list assets of $6.8 million and liabilities of $12.1 million.
New York-based German American Capital Corp., which alone is owed $12 million, could own the property by the end of the year, if a U.S. Bankruptcy Court judge approves the plan.
In a Tuesday court filing, German American is proposing to take ownership from Warsaw Hotel Partners of the Comfort Suites by submitting a “credit bid” of $7.5 million. A credit bid is a legal maneuver in which a bank uses its debt in a property to acquire it.
German American likely is confident that it can resell the property for more than the bid in an attempt to at least get some return on its investment.
Objections to the proposal are due to the bankruptcy court by Oct. 19, and a hearing has been set for Oct. 24.
“Time is clearly of the essence, since the closing of the sale promptly is of critical importance,” a lawyer for Warsaw Hotel Partners wrote in court documents.
German American provided Warsaw Hotel Partners a $12.6 million loan in February 2007 to acquire land and construct the Comfort Suites. The loan came due in November 2010, at which time Warsaw Hotel Partners still owed $11.2 million in principal, according to court documents.
The Comfort Suites continues to operate, as is customary for hotels seeking to reorganize their debts through Chapter 11.