|By Mark Belko, Pittsburgh
Post-GazetteMcClatchy-Tribune Regional News
Sept. 15, 2010--A Tampa, Fla., cardiologist known for his philanthropic work is prepared to take over ownership of the former Hilton Pittsburgh as part of a plan to save the troubled hotel.
In a letter of intent filed in U.S. Bankruptcy Court in Pittsburgh Tuesday, Dr. Kiran C. Patel also pledged to provide $3 million to cover hotel operating costs over the next 13 weeks.
Under the plan outlined in the letter of intent, Dr. Patel would own 89 percent of the hotel at the outset and buy out the remaining 11 percent controlled by Shubh Hotels Pittsburgh LLC over the next three years.
Jonathan Kamin, an attorney representing Shubh, said Dr. Patel also had agreed to pay 100 percent of the "allowed claims" of creditors as part of the plan, which would have to be approved by U.S. Bankruptcy Judge Jeffery A. Deller.
"He's coming in as the white knight to save the asset and the hotel," Mr. Kamin said.
In addition, the attorney said the restructured ownership had reached agreement with another hotel brand, or flag, to replace Hilton Hotels & Resorts, which terminated its franchise licensing agreement nearly two weeks ago.
He would not disclose the name of the new brand but described it as a "substantial flag" of "significantly better quality" than Hilton. He said the hotel would be required to adhere to a four-diamond standard with the new franchise.
Hilton's termination of the franchise license agreement led New York-based lender BlackRock Financial Management Inc. to declare Shubh in default of its $49.6 million mortgage.
As a result, BlackRock sought to foreclose against the prominent hotel property, with its perch at the entrance to the Golden Triangle, forcing Shubh to file for Chapter 11 bankruptcy protection. The bankruptcy triggered an automatic stay of the foreclosure.
The letter of intent was part of a motion filed Tuesday by Shubh asking the court to deny a request by BlackRock to lift the stay so that it could move ahead with the foreclosure. A hearing will be held at BlackRock's request this morning.
"Here, the debtor has shown that it has taken major steps in overcoming the obstacles presented to it. The debtor has articulated a proposed plan of reorganization that is reasonable and has the possibility of being confirmed in a reasonable period of time," the Shubh motion stated.
Under the plan, Dr. Patel, or an entity under his control, would be in charge of the hotel. Mr. Kamin said the doctor also was prepared to invest more money to continue upgrading the hotel.
In a separate motion filed Tuesday seeking to deny a request by Shubh to use lender-controlled hotel revenues for operations, BlackRock asserted there was "no reasonable possibility" of Shubh successfully reorganizing.
Mark Belko: email@example.com or 412-263-1262.
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