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Creditor could take ownership of downtown Comfort Suites

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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.
 

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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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