|By Lisa Brown and Tim Logan, St. Louis
Post-DispatchMcClatchy-Tribune Regional News
April 17, 2012--Michael and Steven Roberts, two prominent St. Louis developers, turned to bankruptcy again on Monday in a bid to protect their ailing business empire from increasingly aggressive creditors.
Their third recent bankruptcy, filed on behalf of a Roberts Companies hotel in Houston, could signal additional filings for five other hotels enmeshed in a legal fight with Bank of America.
In an interview with the Post-Dispatch on Monday, the Roberts brothers said they're turning to Chapter 11 as a means to stave off foreclosure proceedings. Bank of America filed suit in federal court on April 3, alleging the brothers owe $34 million on a defaulted loan for renovations on six of their hotels outside of Missouri. The bank has already launched foreclosure proceedings against five of the properties, the brothers said.
The Robertses, both former St. Louis aldermen, own a wide range of businesses, including 11 hotels, four TV stations and multiple real estate properties across the country, including the Roberts Mayfair Hotel and the Roberts Orpheum Theatre in downtown St. Louis. Their broadcasting company also is in bankruptcy, and some real estate holdings in St. Louis are struggling.
But the Roberts brothers on Monday confidently laid out plans to keep ownership stakes in most of their current holdings, while seeking a large investment in their hotels from a hedge fund or other large investor. They said they have equity totaling up to $35 million in the six hotels caught up in the Bank of America dispute. They said they had personally invested $135 million in acquisition and renovation costs, not including about $11 million in operating losses, in their 11 hotels. So walking away from the properties would make no sense, the brothers said, and the hotels are worth more to potential investors as a group than individually.
"Bank of America is coming at us hard," Michael Roberts said. "We're looking for a forum to present a business plan, but we need cooperation from the lender to present that plan."
The cooperation from the bank broke down in recent weeks, the brothers said, amid pointed emails from Bank of America's "workout" division in Chicago and a canceled meeting. The brothers said they had been close to securing a deal to bring in new management and an infusion of capital for their hotels. But those efforts stalled when Bank of America filed its lawsuit, they said.
In the bankruptcy filed Monday, a Roberts Cos. affiliate, Roberts Hotels Houston LLC, filed for Chapter 11 protection in federal court in St. Louis, listing $50,000 or less in assets and between $10 million and $50 million in estimated liabilities. The 207-room Holiday Inn, located at 11160 Southwest Freeway in Houston, is closed. The other hotels involved in the bank dispute are located in Atlanta, Dallas, Shreveport, La., Spartanburg, S.C., and Tampa, Fla.
Michael and Steven Roberts called the bankruptcy filing a strategic decision. The court-supervised process would give them a chance to reduce debt and more time to find new capital. The bankruptcy on the Houston property was filed first because of a looming foreclosure hearing.
Another hotel the Roberts own in Jackson, Miss., filed for bankruptcy in December, but is not involved in the current Bank of America lawsuit.
The Roberts have done business with Bank of America for decades. At times, Steven Roberts said, they had up to $70 million in loans and accounts there.
The hotel business got behind, they said, when the soft economy cut bookings at most of the hotels. But the brothers had continued to make interest payments on the loans, they said. They did not, however, pay property taxes on some hotels in recent years while waiting for results to improve, which technically put the loans in default, they said.
"I don't know what their thinking is," Michael Roberts said, questioning why the bank would want to own six hotels rather than work out a payment arrangement.
"Pretend and extend -- those are the magic terms out there these days -- give us some breathing room, as good entrepreneurs, to respond to this economy," he said. "We know they are out there doing this (extending loan terms) for other people."
Bank of America denies the assertion that it didn't work with the Robertses. "That's not true," spokeswoman Shirley Norton said. "The bank had been working with the brothers for some time to help them resolve their financial issues. The details of those efforts are included in the lawsuits."
In another suit from a lender, Pulaski Bank last week sued the Robertses over a construction loan tied to their Comfort Inn hotel in the Central West End. The lawsuit alleges the brothers are in default on the loan and owe $6.9 million in principal, interest and other fees.
And last October, Roberts Broadcasting -- the arm that owns their TV and radio stations -- filed for bankruptcy. Roberts Broadcasting is seeking to sell one or more of its TV stations to pay creditors.
Michael Roberts said the recession hurt the hotel business as conventions declined, and a drop in advertising hurt TV ad sales. Their real estate holdings in some cases have fared better, they stressed, and are poised to make money in the recovery.
Steven Roberts said the brothers intend to make good on their debts. But in a cash crunch, they have had to make tough choices about who to pay first. "We pay our bills," he said. "Look at our history."
(c)2012 the St. Louis Post-Dispatch
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