Indebted Owners of Texas Luxury Hotel File for Bankruptcy Protection
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Indebted Owners of Texas Luxury Hotel File for Bankruptcy Protection

April 13, 2012


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Just hours before a judge was scheduled to entertain a possible foreclosure hearing on their property, the owners of a luxury hotel in Fort Worth, Texas filed for Chapter 11 bankruptcy protection, according to a report from the Fort Worth Star Telegram.

Sources suggest that the bankruptcy filing represented a calculated effort to stave off an impending foreclosure on the Sheraton Fort Worth Hotel.

By filing for Chapter 11, the owners of the Sheraton will avoid foreclosure, at least temporarily, because bankruptcy’s automatic stay puts an immediate halt to foreclosure proceedings once a company or individual files for bankruptcy.

In their bankruptcy filing, Vestin Origins, which owns the struggling hotel, told the court that it had both assets and debts worth between $50 million and $100 million. The filing also listed six other companies in Tarrant County, Texas among the group’s top 20 creditors.

The bankruptcy filing comes on the heels of a maneuver by Dougherty Funding, a financial group in Minneapolis, to foreclose on the Sheraton hotel. Presidio Hotel Group, who originally bought the hotel, owed Dougherty around $44 million. Presidio Hotel Group also reportedly borrowed $11.8 million from Vestin Origins. According to the report, in February, Presidio deeded the property to Vestin in lieu of foreclosure.

The hotel also reportedly owes more than $70,000 in property taxes to state officials, and it is facing a lien that was filed by a construction company in Kansas claiming that Presidio owes it more than $1.5 million. A Colorado hotel management company is also owed almost $500,000 in unpaid compensation, according to the filing.

Sources indicate that Presidio initially purchased the hotel in 2006 and invested more than $48 million to renovate all of the hotel’s 429 rooms, which are located in two different towers.

In addition to the expensive renovations, the new owners also added an 8,000-square-foot fitness center, as well as 22,000 additional square feet of meeting space.

When the recession struck in 2008, the hotel, like many others across the country, saw declining revenues as American consumers reduced their spending on travel.

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