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Developer files for bankruptcy; former Holiday Inn not in danger of closing, officials say(Herald & Review (Decatur, IL) (KRT) Via Thomson Dialog NewsEdge) Aug. 11--DECATUR -- The Decatur Conference Center and Hotel is not closing. Officials reiterated that fact Thursday, a day after its parent company, Real Estate Investors of Decatur LLC, filed for Chapter 11 bankruptcy protection. "Real Estate Investors of Decatur isn't going to go out and close the doors. The bank (Central Illinois Bank) isn't going to try and close the doors," said Tim Raycraft, a spokesman and attorney for Decatur developer John Cardwell. "It is a big asset to Decatur. Everybody wants to see the hotel stay in business." Real Estate Investors of Decatur filed the voluntary petition for bankruptcy protection Wednesday with the U.S. Bankruptcy Court, Central District of Illinois in Springfield. The petition was filed by Cardwell, the corporation's manager and a shareholder. Raycraft said the bankruptcy filing is a direct response to Central Illinois Bank taking foreclosure action involving the former Holiday Inn Select Hotel and Conference Center after efforts to reach another short-term loan extension failed. The complaint, filed June 27 by Central Illinois Bank in Macon County Circuit Court, alleges Real Estate Investors of Decatur is in default on the hotel's mortgage for more than $12.6 million. A second count of the complaint involves a $500,000 second mortgage, for which $37,218.21 was due. The complaint alleges no payments have been made toward the retirement of either debt in nearly a year. The remedies being sought by the bank include it taking possession of the hotel or having a receiver in place to collect money taken in by the hotel and putting it toward the debt. It also is seeking authority to sell the property. The bankruptcy filing puts in limbo a portion of the foreclosure complaint involving Real Estate Investors of Decatur. However, the local case continues against Cardwell and the other named defendants -- Decatur Hospitality Services LLC, formerly known as Cardwell and Randall Hospitality Services LLC; and James R. Randall. Cardwell and Randall are named in two additional counts each as being personally liable for the debt based on their having signed as guarantors of the note. That portion of the local case continues. Still pending in the Macon County case is a motion filed on behalf of the corporation and Cardwell to allow their attorney more time to become acquainted with the case. The motion cites the numerous employees and amount of money involved as the reasons more time is needed. Central Illinois Bank has objected to the request because "the subject hotel is generating revenue that is not being used to pay the mortgage debt -- thus increasing the liability. Furthermore, it is unknown if (the defendant) is using the revenue generated from the hotel to properly maintain the facility, pay utilities and taxes and keep other liens from attaching to the property." In an order issued Thursday, Judge Mary P. Garman said the corporation will retain possession of the hotel for the time being and set a Dec. 8 deadline for a Chapter 11 plan to be filed. In the meantime, the corporation has until Aug. 25 to file various documents with the bankruptcy court that will shed more light on its financial condition. Raycraft said a downturn in the hospitality industry in the wake of the 9/11 attacks continues to plague the Decatur hotel. The downturn also made it impossible to build the water park, the plans for which led to the purchase of the property by a Cardwell-led group. "(Filing for bankruptcy) will allow the owner to reorganize in a reasonable and orderly fashion," said John Barr, the Decatur attorney who is representing the corporation in the bankruptcy proceedings. It also allows more time to find a serious buyer for the property, Raycraft said. Raycraft said there has been serious interest shown during the past year in purchasing the property, including one group that signed a purchase agreement. That deal crumbled, however, after the purchaser took advantage of an exit clause in the agreement. Raycraft said the bankruptcy proceeding does include other commercial properties held by Real Estate Investors of Decatur, but he declined to identify the properties out of concern it would create more speculation about their fate. Joseph Chamley, the attorney representing Central Illinois Bank, was unavailable for comment Thursday afternoon. Scott Perry can be reached at [email protected] or 421-7976. |