Oct. 16, 2012--A federal bankruptcy judge Monday thwarted a move by creditors to convert a Chapter 11 reorganization of Halsey Minor's Landmark Hotel into a Chapter 7 asset liquidation.

Representatives of general contractor Clancy & Theys Construction Co. told Bankruptcy Judge William E. Anderson that June's $6.25-million auction sale of the hotel to Atlanta developer John Dewberry means that Minor no longer has a business to reorganize. Clancy & Theys holds a mechanic's lien of more than $2 million on the hotel's skeletal structure.

Moving the Minor Family Hotel and Landmark bankruptcy into liquidation would hasten the end of the court case and allow fair discovery and distribution of other company assets through a federal bankruptcy trustee, creditors said.

"In two years since this case was filed, there has been no operating income [for Minor Family Hotels] and there will never be," said Stephen G. Test, an attorney for Clancy & Theys. "This [Chapter 11 suit] was filed because Halsey Minor wanted to retain control of this property. He no longer has control and there is no income."

Bill Schmidheiser, representing the hotel architect and creditor R.D. Jones, agreed.

"This is an important hearing but it's not important enough for Mr. Minor to show up," he said, adding that Minor did not appear in court for the auction, either. "There is not going to be a Chapter 11 plan of reorganization. There is nothing left. The Chapter 7 trustee can perform the remaining duties."

Financier Specialty Finance Group, which has a claim of more than $13 million against Minor Family Hotels for the Landmark, argued along with Minor's representative that the case should remain a reorganization. Richard Maxwell, representing Minor, agreed.

"What needs to be done to wind this up can be done less expensively through the existing process," Maxwell told the judge. "There is certain knowledge and expertise available through Minor hotels staff, and various actions against creditors, claims of creditors and unsecured creditors, that can be worked through by keeping it in Chapter 11."

After hearing arguments from seven attorneys, Anderson made his decision without comment.

The June sale of the Landmark to Dewberry and his Atlanta-based Deerfield Square Associates II, LLC is perhaps the brightest spot since the March 2008 groundbreaking on the 100-room, nine-story, $30-million hotel.

Construction halted eight months later, with accusations flying and the economy falling into recession. Minor accused Specialty Finance Group of missing a $1.1-million payment on the $23.7-million construction loan. Developer Lee Danielson told media that construction would continue, but Minor contradicted Danielson and then fired him.

Danielson and Minor sued each other. Minor and the bank sued each other. Contractors and subcontractors filed liens.

Specialty Finance Group and its parent, Georgia-based Silverton Bank, failed. Minor Family Hotels filed for bankruptcy in September 2010. The hotel still looms unfinished over downtown.

Dewberry said construction is on hold until his company finishes a South Carolina project. The Landmark likely will feature a European flavor of understated luxury as opposed to opulence, the former Georgia Tech football star said.

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