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Internal Revenue Service Asks Federal Bankruptcy Court to Put the
 Artisan Hotels in El Paso and Las Vegas into Chapter 7 Liquidation

By Vic Kolenc, El Paso Times, TexasMcClatchy-Tribune Regional News

December 8, 2009 - --EL PASO -- The Internal Revenue Service has asked a federal bankruptcy court to put the Artisan Hotel in El Paso, and its sister hotel in Las Vegas, into Chapter 7 bankruptcy liquidation.

The agency filed a motion in federal bankruptcy court in Las Vegas on Friday, saying that 325 Texvada Investments, which owns the Artisan in El Paso and the Artisan Hotel & Spa in Las Vegas have not not made required employment tax deposits, have not filed required employment tax returns, and the Las Vegas hotel has not filed required monthly operating reports with the bankruptcy court.

The hotels filed for Chapter 11 bankruptcy reorganization late last year and the cases are being jointly administered by the court.

"The failure to comply with federal tax obligations and the failure to file monthly (operation) reports demonstrates that the debtors are mismanaging their respective estates," and indicates a "continuing loss and an inability to rehabilitate the respective businesses," states the federal government's request to convert the Chapter 11 filings into Chapter 7 cases.

Douglas Da Silva, who operates the El Paso hotel and had been operating the Las Vegas hotel, said no employment taxes or tax reports are due for the El Paso hotel because it didn't start operating until the fall of this year. The hotel's ground-floor bar and cafe opened in September, and its 72 rooms opened in October.

Da Silva said he expects his lawyer will contest the IRS motion. A hearing on the IRS

motion is scheduled for Jan. 6.

Da Silva bought the hotel at 325 N. Kansas more than three years ago for $1.6 million, and did extensive renovations to the building. Various problems stopped him from operating the hotel until late this year.

Da Silva said he doesn't know what's going on with the Las Vegas hotel because his wife, daughter, and son-in-law are operating that hotel while he is in El Paso full time running the hotel here.

"Mrs. Da Silva is operating the (Las Vegas) property. It's not doing well" because the Las Vegas "economy is terrible," Da Silva said, but "she's getting all the bills paid."

Problems at the Las Vegas hotel do not affect the El Paso hotel because "they are unrelated entities," Da Silva said.

Bill Blaziek, general manager of the El Paso Convention and Visitors Bureau, said he couldn't comment on the Artisan's legal problems. But, he said, he hopes the Artisan can continue to operate because "we have a rather critical need of hotels in the Downtown area."

"They have improved the property and still have work in progress," Blaziek added.

Da Silva said, "Things are going nicely" at the El Paso hotel. "We've already sold out for Sun Bowl weekend (Dec. 30-Jan. 1), and the lounge is doing nicely."

The hotel is filling an average of more than 20 rooms a night, he said.

The El Paso hotel's last operating report to the bankruptcy court showed the hotel lost $35,774 in September and projected a loss of $30,000 in October, according to the IRS motion. The hotel's October report, which was due Nov. 20, had not yet been filed with the court, the IRS motion reported.

Vic Kolenc may be reached at vkolenc@elpasotimes.com; 546-6421.

For more information: www.artisanelpaso.com; www.theartisanhotel.com.

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To see more of the El Paso Times, or to subscribe to the newspaper, go to http://www.elpasotimes.com.

Copyright (c) 2009, El Paso Times, Texas

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