|By Ryan Denham, The Pantagraph,
Bloomington, Ill.McClatchy-Tribune Regional News
Apr. 22, 2010--BLOOMINGTON -- A Springfield bank wants an outside company to manage the west-side Holiday Inn Express as it moves to foreclose on the property, the latest setback for the hotel's owner.
The foreclosure, filed last week in McLean County circuit court, claims Bloomington Hospitality Group LLC defaulted on a $3.1 million loan on the property at 1031 Wylie Drive, court records show. Local hotelier DeVang Patel runs Bloomington Hospitality.
The Bank of Springfield also asked that Iowa-based Kinseth Hotel Corp. be appointed receiver of the hotel as the case moves forward, claiming that the financial situation of Patel's group threatens the property's value. The bank said Kinseth, which operates more than 40 hotels including four in Illinois, has experience managing distressed hotels.
Patel declined comment Thursday when reached through an attorney.
Patel wrote to the bank last month after being warned that foreclosure loomed, court records show. In it, Patel told the bank that the Holiday Inn Express was expected to lose about $200,000 in 2009 as a result of the recession, plus similar losses at other Patel hotels in Bloomington and Decatur.
In the letter, Patel said his company was "making an honest and diligent effort" to settle its debts, including unpaid real-estate and payroll taxes. He said the company's financial position should improve by October and that he wants to develop a new payment plan with the bank.
"As a result of these tough economic conditions, we naturally have had to tighten our belts and have reduced our operating costs wherever possible to conform to the lack of cash flow from our hotel operations," Patel wrote.
The bank responded to Patel's letter demanding action on the defaulted loan by April 1. The foreclosure was filed April 14.
Bloomington Hospitality purchased the hotel in 2007, converting it from a Wingate Inn to the Holiday Inn Express brand.
Another Patel hotel property, Days Inn, 202 Landmark Drive, Normal, was sold to mortgage holders RM KIDS LLC in February. Patel owed more than $3.2 million on the Days Inn mortgage.
A May 25 hearing has been set on a foreclosure of the Staywood Inn property at 8 Traders Circle, Normal. Patel, through his company Normal Hospitality LLC, had plans to convert the property to a Crowne Plaza. Court records state Normal Hospitality owes Morton Community Bank more than $7 million.
A hearing has been set for Oct. 8 on the Holiday Inn Express foreclosure.
Mary Ann Ford contributed to this report.
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