|By Matt Glynn, The Buffalo News,
N.Y.McClatchy-Tribune Regional News
May 12, 2010--The company that owns the Holiday Inn Resort and Conference Center on Grand Island has filed for Chapter 11 bankruptcy.
American Hospitality LLC bought the Holiday Inn in 2004. The property continues its regular day-to-day operations.
The hotel, at 100 Whitehaven Road, was placed into receivership last month after a foreclosure action by mortgage holder Royal Bank of Canada. The bank claims it is owed nearly $7 million.
A management company is handling the daily operations of the 263-room hotel under a contract. The property opened in 1972 and has a sweeping view of the Niagara River.
The bankruptcy filing by American Hospitality has put the foreclosure process on hold, said K. Michael Sawicki, who was appointed receiver by State Supreme Court Justice Kevin Dillon last month.
American Hospitality is seeking the removal of the receiver and the return of assets to American Hospitality's control, a step that typically occurs after a bankruptcy filing, with some exceptions. But the Royal Bank of Canada objects and is seeking to have Sawicki retained as receiver.
The two sides appeared before U.S. Bankruptcy Court Judge Carl L. Bucki on Tuesday, but they agreed to adjourn the hearing until May 25 as they attempt to reach an agreement. Sawicki remains the receiver at least until then.
Arthur Baumeister, an attorney for American Hospitality, blamed the Holiday Inn's financial woes on the severe downturn in the economy.
"This company had shown above-average growth in income through 2007," he said after Tuesday's court appearance. But its revenues were down 15 percent in 2009, creating a cash flow problem, he said.
Baumeister said the company has a plan to reorganize through bankruptcy. And he said advance bookings are up "substantially" from last year.
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