An Indianapolis-based hotelier reeling from the recession has filed for bankruptcy on seven properties across the nation to protect them from foreclosure.
On Nov. 4, seven affiliates of Indianapolis-based Sun Development & Management Corp. representing the properties filed petitions for Chapter 11 bankruptcy reorganization in the southern district of Indiana. Sun Chairman and CEO Brahat Patel is listed as the general partner or managing member of all seven affiliates.
Chapter 11 bankruptcy allows a debtor time to reorganize its business affairs and assets.
Court documents identify The National Republic Bank of Chicago as a secured creditor with mortgages on all seven properties. It is owed about $120 million in total. In the bankruptcy filings, the affiliates dispute the amounts.
The properties in question are the Springhill Suites hotels in Rosenberg, Texas, and Tampa, Fla.; the Embassy Suites hotel in Ontario, Calif.; the Hampton Inn & Suites hotel in Riverside, Calif.; the Holiday Inn hotel in Titusville, Fla.; the Fairfield Inn & Suites hotel in Conroe, Texas; and the Hilton Garden Inn hotel in Mt. Laurel, N.J.
In court filings, the Sun affiliates weave a story about how the recession crippled the hospitality industry. The affiliates were in the process of building several hotels at the time, and eventually could not afford to both continue paying construction costs and pay the interest on the loans.
In October, the bank filed to foreclose on five of the properties, according to court filings.
The companies decided their best course of action was to file for Chapter 11 reorganization, giving them the best opportunity to restructure or refinance the loans and stabilize the seven properties.
“We made a restructuring proposal to our lender, The National Republic Bank of Chicago, but it refused to negotiate,” Patel said in a press release.
A representative for the bank declined to comment on the cases.
Patel and entities under his control own about three dozen hotels throughout the U.S., including a Comfort Inn and Holiday Inn Express in Indianapolis, a Hampton Inn & Suites and Holiday Inn Express in Brownsburg, and a Holiday Inn Express in Kokomo.
The hotels will continue to operate during the Chapter 11 process.