|By Sandra Baker, Fort Worth
Star-TelegramMcClatchy-Tribune Regional News
Oct. 17, 2012--FORT WORTH -- Dallas-based Prism Hotels & Resorts was given the go-ahead to begin a 60-day due-diligence review of the Sheraton Hotel and Spa in downtown Fort Worth after a bankruptcy judge approved the sale of the property Tuesday.
Judge D. Michael Lynn also gave a group composed of the former owners the chance to submit a bid to buy back the hotel.
Lynn scheduled a status hearing in two weeks and told the parties that the hotel will be sold to whichever group shows that it has the cash and can close the deal quickly.
"I want this hotel sold and I want it sold fast," Lynn said. "I do not want to be dealing with this hotel after New Year's. I want to get creditors paid in this case."
Prism filed a contract a few weeks ago, offering $55 million for the 431-room hotel at 1701 Commerce St.
Steve Van, Prism's president and CEO, testified that his company has started a review but needs more time to apply for a state liquor license, file a franchise application with Starwood Hotels for the Sheraton flag, and obtain rights from the city to an economic development agreement that provides up to $21 million in tax rebates over 20 years.
Van also said he will begin negotiating with potential equity partners for the purchase. Prism has been a consultant on the Sheraton hotel since the spring and operates a Sheraton in Charleston, S.C.
The creditor group, made up of Presidio Hotel Fort Worth, PHM Services, Edward DeLorme and Sushil Patel, said in a court filing that it would pay $51 million for the hotel.
The group has a filed a claim in the case, saying it is owed almost $500,000 paid last year as part of the economic development agreement. The money is being held in a court account until the judge determines who is entitled to it.
1701 Commerce Llc., an entity of Vestin Originations in Las Vegas, is selling the hotel as part of its Chapter 11 reorganization.
Vestin filed for bankruptcy protection in March after a series of lawsuits in state District Court between it and Dougherty Funding in Minnesota.
The two loaned money to Presidio to buy and renovate the hotel. Last year, they became embroiled in lawsuits over who had the right to foreclose after Presidio defaulted on more than $56 million in notes.
In lieu of foreclosure, Presidio deeded the property to Vestin, which was the junior lender behind Dougherty, sparking the legal filings.
Sandra Baker, 817-390-7727
(c)2012 the Fort Worth Star-Telegram
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