|By Rodney Thrash, St. Petersburg Times,
Fla.McClatchy-Tribune Regional News
Oct. 29, 2010--SAFETY HARBOR -- One of the state's largest and oldest spas filed for protection under Chapter 11 of the U.S. Bankruptcy Code, officials announced Thursday.
Safety Harbor Resort and Spa plans to honor all reservations, memberships, events, bookings and gift cards as it attempts to dig out of more than $30 million in debt.
"Their big problem has been the mortgage," said resort lawyer Steven Berman. "The mortgage debt is around $30 million, and there's additional unsecured debt to trade creditors."
Berman said all of the other debt can be satisfied in the course of the bankruptcy.
Years of plunging real estate values and declining business have not helped.For the past year, the resort has tried to restructure a loan with mortgage lender Wells Fargo. The mortgage includes undeveloped land surrounding the resort that has declined in value, which has affected the overall operation. Talks with Wells Fargo broke down on Monday.
The Chapter 11 filing allows the owners to pay down debt and keep the resort open until the market improves, said Tina Napolitano, the resort's director of sales. She called the move preferable to "development options that might detract from the resort or from the quaint serenity of Safety Harbor's historic downtown business district."
S.H.S. Resort LLC, a company formed by Dunedin developer Olympia Development Group, purchased the resort in 2004 for more than $20 million.
Led by president William E. Touloumis, the group initially wanted to demolish the landmark and build condos, shops, residences and a new spa in its place.
That didn't sit well with the community. After a closer inspection of the buildings, the group realized that most are structurally sound and decided it made more sense to renovate and remodel.
The 22-acre hotel and spa has been a downtown Safety Harbor fixture for more than 60 years and is listed on the state's register of historic places. It is known for the mineral springs that run beneath the property.
The flagship building at the corner of Main Street and Bayshore Drive is not involved in the Chapter 11 filing.
"Believe me," Napolitano said, "this is a positive for us."
Rodney Thrash can be reached at email@example.com or (727) 445-4167.
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