|By Sara K. Clarke, The Orlando Sentinel,
Fla.McClatchy-Tribune Regional News
Aug. 18, 2009 - The downtown Orlando Sheraton is headed for the auction block next month, now that the hotel's owner has failed to come up with a plan to emerge from bankruptcy.
The hotel, which sits at the north end of downtown near Interstate 4 and Lake Ivanhoe, is scheduled for a Sept. 3 foreclosure sale. Its owner, CF Hospitality Inc., said it is not generating enough cash flow to cover all of its bills.
"There was no plan that we could execute to ... come out of bankruptcy," said Edwin Reisz, who was brought on board as president of CF Hospitality after it filed for Chapter 11 bankruptcy protection in May 2008. "We didn't want to get our vendors into a position where they weren't going to get paid."
George Zaczac, who owns CF Hospitality, owed $70 million on the Orlando hotel and a sister property in Miami when he filed for protection from creditors in U.S. Bankruptcy Court last year. Both properties were operating at a loss, and courtroom testimony in Orlando painted a bleak picture of the Sheraton's prospects.
With an additional penalty of about $26 million assessed because of a contractual default, the company's total debt rose to more than $90 million, Reisz said.
He said that, after entering bankruptcy, the hotel managed to pay its bills -- until this year's particularly slow summer season.With no reorganization plan in place, bankruptcy Judge Arthur B. Briskman was set to convert the case to a Chapter 7 bankruptcy liquidation last month. But the company's court-appointed trustee recommended that the hotel be kept operating until it could be sold, so Briskman dismissed the bankruptcy case.
A lawyer for the lender, Gramercy Investments, confirmed last week that a foreclosure sale was scheduled for the 341-room hotel.
In addition to owing millions on its mortgage, the hotel has debts owed to unsecured creditors totaling between $200,000 and $300,000, said Brett Marks, a lawyer with Akerman Senterfitt who represented the creditors' committee.
Some of the companies that are owed money had done business with the hotel for years, he said.
While it is possible that vendors could recoup some of their losses, Marks said that is unlikely.
"Those creditors, unfortunately, won't get paid," he said.
The 15-story hotel, built in the early 1980s, originally opened in June 1985 as the Radisson Plaza Hotel Orlando.
Sara K. Clarke can be reached at email@example.com or 407-420-5664.
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