|By Mark Belko, Pittsburgh
Post-GazetteMcClatchy-Tribune Regional News
September 28, 2010 - The company that holds the mortgage on the former Hilton Pittsburgh is challenging a bid to turn the Downtown hotel into a Wyndham Grand.
In a petition filed Monday in U.S. Bankruptcy Court in Pittsburgh, BlackRock Financial Management Inc. opposed the change, saying a luxury Wyndham Grand operated by Wyndham Hotels and Resorts is not a "qualified franchisor" under the loan agreement it signed with the hotel's owner.
BlackRock, in its filing, also accused Shubh Hotels Pittsburgh LLC of being less than forthcoming about its relationship with Kiran Patel, a Tampa, Fla., cardiologist and philanthropist who is assuming ownership of the hotel.
Shubh attorney Jonathan Kamin said Monday that Dr. Patel signed a purchase agreement to become full owner of the hotel. Dr. Patel previously had proposed taking an 89 percent interest and buying out the other 11 percent from Shubh over three years.
"We're pleased to have a sponsor who has both the resources and the vision to bring this hotel back to the crown jewel of Pittsburgh," Mr. Kamin said.
However, BlackRock apparently sees it differently. It charged that Dr. Patel already was involved in the ownership and management of the hotel before Shubh filed for bankruptcy in early September.
The lender accused Shubh of "playing fast and loose with the court and its principal creditor" by refusing to disclose the connections and the involvement Dr. Patel "has had in the mismanagement of the hotel" before the bankruptcy filing.
While a Sept. 2 news release from Shubh stated that it had transferred control of the hotel to Dr. Patel at that time, Mr. Kamin said the ownership transfer did not occur until Sunday.
"Dr. Patel was never anything more than a lender to this property who has come in as a white knight to reposition the asset," Mr. Kamin said. "I am suspicious of BlackRock's motives in trying to impugn Dr. Patel."
He also argued that Wyndham was more than qualified to serve as franchisor, saying it was the world's largest hotelier and "one of the top performing brands in the world."
BlackRock made its arguments in a bid to have the court lift a stay that prevents it from foreclosing against Shubh.
The lender sought foreclosure after Hilton Hotels & Resorts terminated its franchise license agreement with Shubh. BlackRock said the termination triggered a default under Shubh's $49.6 million mortgage. Shubh filed for Chapter 11 protection to prevent the foreclosure.
Mark Belko: email@example.com or 412-263-1262.
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