Pacific Islandia California Inc., owner of the 489-room Sheraton Anaheim Hotel, has filed for bankruptcy protection.

Anaheim-based Pacific Islandia said the filing stems from a dispute with the hotel’s lender, Littleton, Colo.-based MONY Realty Capital Inc., part of New York's MONY Group Inc.
 

The filing isn't a result of the hotel’s performance or the downturn in tourism in the past year, said Libby Zarrahy, general manager of the Sheraton hotel and a director of the ownership group. Hotel service won’t be disrupted during the reorganization, she said.  The dispute between Pacific Islandia and MONY centers on “continued delays in disbursement of funds belonging to Sheraton Anaheim,” Zarrahy alleged. “In order to protect these funds and

Sheraton Anaheim Hotel 900 S. Disneyland Drive Anaheim, California

Sheraton legal counsel John Graham, a partner in the Century City law firm of Jeffer, Mangels, Butler & Marmaro LLP, said he believed MONY Realty planned to support a request to continue hotel operations, pay vendors and workers and use all revenue toward hotel operations during the bankruptcy. 

A hearing on the request was set for late last week. 

“We expect the court to agree,” Graham said. 

A MONY official said "it wouldn't be appropriate to make a public comment" for this story.

Steven Spector, another member of the Jeffer, Mangels legal team, said the Sheraton franchise at the hotel is “not in jeopardy.”

Sheraton parent Starwood Hotels & Resorts Worldwide Inc. of White Plains, N.Y., is “extremely supportive” of the bankruptcy move, he said.

A Starwood representative couldn’t be reached for comment.

“The Chapter 11 (bankruptcy) was not filed due to vendor issues,” Spector said. “Vendors will be paid and no interruption of services is expected.”

The hotel has performed well in recent months and “exceeded projections” for January and February, Spector said.

Talks between MONY and Pacific Islandia are expected this week.

“We’re cautiously optimistic that it will lead to a positive resolution,” Spector said.

Graham said the hotel is planning a renovation and the owners recently acquired the adjacent Spaghetti Station restaurant that also is set for a remake.

The Sheraton Anaheim, built in 1969, is one of the oldest full-service hotels in the Disneyland area and ranked No. 10 on the most recent Business Journal list of the county’s largest hotels. 

It has 20,000 square feet of meeting space, putting it among the largest 15 meetings facilities in OC.

Anaheim-based Pacific Islandia Guam Inc., parent company of Pacific Islandia California, acquired the hotel for $27.3 million in 1990 in a foreclosure sale by Sanwa Bank, according to records. 

The hotel sits on land owned by an individual trust. 
 

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. Cain holds bachelor’s and master’s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late ’70s. She enjoys travel, gardening, reading and spoiling her three cats.