|By Mark Belko, Pittsburgh
Post-GazetteMcClatchy-Tribune Regional News
Nov. 11, 2010--A Tampa cardiologist, who last month described himself as a "fool" for sinking so much money into the former Hilton Pittsburgh, is prepared to give a little more.
Dr. Kiran C. Patel, who is seeking to take over the property in U.S. Bankruptcy Court, has offered to supply a $500,000 loan to help the troubled hotel through the winter.
In a motion filed this week, Shubh Hotels Pittsburgh, owner of the former Hilton, stated it had an "urgent need for the use of cash" because of declining hotel revenues. Shubh tied the drop to the absence of a hotel flag and three weeks without a Steelers home game, which it said is a "significant factor" in driving business to the property. Without a flag, it argued, it does not have the benefit of a centralized reservations system or sales staff to direct visitors to the 712-room hotel, Pittsburgh's largest.
David Rudov, a Shubh attorney, said the hotel hasn't lost any money yet but is projected to do so during the winter. He said it is not unusual for it or other hotels in Pittsburgh to lose money during that season.
The hotel, now called the Grand Pittsburgh Downtown, has been without a flag since early September when Hilton Hotels & Resorts terminated its franchise license agreement with Shubh.
Hilton's termination amounted to a default under Shubh's $49.6 million mortgage with BlackRock Financial Management Inc., prompting the New York lender to try to foreclose against Shubh. The hotel owner filed for Chapter 11 bankruptcy protection in an effort to avoid foreclosure.
Dr. Patel became full equity owner of Shubh in a transfer that occurred last month. He has filed a plan of reorganization that would rebrand the hotel a Wyndham Grand under Wyndham Hotels and Resorts chain, but that has not been approved.
Under his latest proposal, Dr. Patel has offered to increase the amount of money he is willing to lend the hotel from $300,000 to $500,000. He has estimated that he is owed $3.7 million for loans he previously advanced Shubh and its former principal Atul Bisaria to help keep the hotel afloat the last two years. He has said he wants to own the property to protect his investment. BlackRock also has submitted a proposal for a loan to help the hotel through lean times but the Shubh motion describes the terms as "overwhelmingly onerous" and "rapacious."
In a separate matter, U.S. Trustee Roberta DeAngelis is recommending the appointment of Margaret M. Good, president and founder of The Meridian Group, a Pittsburgh investment banking and turnaround consulting firm, as the examiner to review and monitor spending at the hotel.
U.S. Bankruptcy Judge Jeffery A. Deller ordered the appointment of the examiner last week, saying that some hotel spending had "raised a lot of eyebrows."
Mark Belko: email@example.com or 412-263-1262.
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