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Former Pontchartrain Hotel in Detroit is Shuttered Again;
Lender Foreclosed on Owner Shubh Hotels

By John Gallagher, Detroit Free PressMcClatchy-Tribune Regional News

Aug. 31, 2009 --Detroit's Riverside Hotel, long the most distressed hotel in the downtown market going back to its days as the former Pontchartrain, is closed and will be put up for sale again.

The latest chapter in the tangled financial history began in early July, when Mutual Bank, a suburban Chicago lender, foreclosed on Shubh Hotels Detroit LLC, a partnership based in Boca Raton, Fla., that had purchased the old Pontchartrain in 2005.

Then on July 31, the Illinois Department of Financial Professional Regulation's division of banking closed down Mutual Bank as insolvent and appointed the Federal Deposit Insurance Corp. as receiver. United Central Bank of Garland, Texas, assumed Mutual's deposits and assets, including its loans to the Riverside Hotel.

Royal Oak attorney David Findling, the local receiver appointed by the Wayne County Circuit Court after Mutual foreclosed on Shubh, said the hotel requires significant repairs before it can reopen.

Eventually he will try to find a buyer, Findling said, with the only question being whether United Central Bank wants to put enough money into the hotel to make the repairs and reopen it prior to a sale.

An operating hotel would fetch a better price than a closed hotel, he said, because an operating hotel enjoys a revenue stream and a certain amount of goodwill in the community.

"The real question is whether the bank wants to invest that money for that good will, and that's a decision that the bank makes," Findling said today. "My goal is to not have this be another empty building in the city."

Taking the hotel's approximately 400 rooms off the downtown market temporarily may not hurt Detroit's ability to book conventions, since downtown has recently added 2,000 new rooms at the three casino hotels and the renovated Westin Book Cadillac and Doubletree Fort Shelby.

Even so, the troubles afflicting the Riverside are distressing, said Michael O'Callaghan, executive vice president of the Detroit Metro Convention & Visitors Bureau.

"The inventory of rooms in the downtown area has roughly doubled in the past three or four years and we've got this economic downtown," O'Callaghan said today.

Even so, he added, "It's still disappointing to see a hotel positioned as nicely as that one is to go through the sort of problems that one has been plagued with for so many years."

The hotel has been through multiple owners and name changes over the past two decades. Even being located just across Washington Boulevard from the Cobo Center convention center could not guarantee success.

Shubh had said in 2005 that it intended to remake the ailing Pontchartrain as a first-class hotel. For various reasons, those hopes fell well short of becoming reality. Before Mutual foreclosed, Shubh had not paid the hotel employees for about two months, Findling said.

In one particularly bad experience, guests staying there in late June for the National Baptists Convention left early after complaining of no air conditioning and other problems.

Contact JOHN GALLAGHER: 313-222-5173 or


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