Getting Lenders out of Non-performing Hotels

Published on October 31, 2018

Sacramento Hotel

Receivership Sale – Better than Hotel Foreclosures

Non-performing hotels can cause unique challenges for their lenders when asbestos is present. Foreclosing is unattractive due to the threat of future environmental liability risk for all parties on the property’s chain of title. A Receivership Sale, however, provides a path to recovery without the future environmental liability risk.

From Non-Performing to SOLD thru Receivership

Our proven process to turn around non-performing hotels blends our deep knowledge of receiverships, operations and the hospitality industry.  Once the business is stabilized, we aggressively pursue an exit for our lender-client pursuant to a court-approved process.

As a bonus, cash flow generated through hotel operations provides the opportunity for the business to pay most, if not all, of the receivership costs. Win-Win!

Real Estate - Hotels - Receivership Process

Our Receivership Turnaround & Sale Results

As State Court Receiver, we achieved capital recoveries for our lender-clients without putting them at risk of going on the title of properties with bad environmental files.


Hotel with Swimming Pool

Arizona Hotel – State Court Receivership

  • Removed the borrower, who was stealing FFE and moving it to another property
  • Negotiated with national brand to assure assignability of franchise agreement
  • Shut down all rooms that were health risks
  • Thwarted cyber-pirate’s attempt to take the reservation system hostage and avoided paying ransom

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Sacramento, California Hotel – State Court Receivership Sacramento Hotel

  • Worked with national brand to preserve and transfer franchise agreement
  • Identified qualified agent from outside the market
  • Successfully transferred the property via a court-approved process

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Central Coast, California Hotel – Central Coast HotelState Court Receivership

  • Borrower had unsuccessfully tried to sell the property for multiple years
  • Identified qualified agent from outside the local market
  • Successfully transferred the property via a court-approved sale process

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Sacramento, California Hotel – State Court Receivership Sacramento Hotel Fire Receivership

  • Hotel was partially burned down in a fire and not operational.  Upon determining it was cost-prohibitive to rebuild, we pursued a sale
  • Took control of property; completed required clean up and ensured shuttered property was in compliance with city and county to avoid fines
  • Property was brought to compliance with city and county, avoiding fines
  • Confirmed property met requirements to assure return on insurance claim
  • Property was sold “as is”

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FAQ:   What can lenders do to maximize their returns from troubled hotel & motel-secured loans? 

In our two decades of professional experience representing lenders with troubled loans, we’ve learned that the best outcomes generally result from early action.

  1. Consider the pros and cons of your alternatives, such as receivership, bankruptcy, out-of-court restructuring or foreclosure.
  2. Talk to your financial advisor and legal counsel to determine which alternative makes the most sense.

Sit back as your Receiver/Trustee /CRO/Financial Advisor takes possession of the property and manages your exit via sale or refinancing.


Contact David Kieffer or David Stapleton for more information.

 

 

 

 

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