Nov. 23, 2011--A court-appointed receiver has been named to operate the new Radisson Hotel in Menomonee Falls -- at the request of the village, which provided a $17.65 million loan to finance the hotel's development.

The first payment on the village loan is overdue.

A statement village officials issued Tuesday said the receivership filing was supported by the hotel's owners, an investors group led by hotel operator Dean Grosskopf, and by Minneapolis-based Radisson Hotels International Inc., which franchises the Radisson brand.

Grosskopf's firm remains the manager of the Radisson. Milwaukee attorney Seth Dizard is the receiver, and Grosskopf's firm will follow his instructions, said Village Manager Mark Fitzgerald.

Dizard's appointment, by Waukesha County Circuit Judge Donald Hassin, pre-empts a rival request to appoint a different receiver for the 135-room hotel on Main St., just west of U.S. Highway 45.

That request was made by investors groups that have filed a civil fraud suit in Dane County Circuit Court against Grosskopf's ownership group, Lodging Investors of Menomonee Falls LLC. That receivership request has now been dropped, said Lawrence Drabot, Grosskopf's attorney.

The lawsuit, filed by groups led by Madison investor George Raupp, claims Professional Hospitality LLC, Grosskopf's hotel management firm, wrongfully diverted $1.2 million from bank accounts for two Fairfield Inns, in Green Bay and Beloit.

Funds from those hotels, where Raupp is an owner and Professional Hospitality is the manager, were then used to help finance the Radisson's development, the suit claims.

Grosskopf denies those claims.

Raupp, in his lawsuit, also alleges Lodging Investors of Menomonee Falls is insolvent, or close to insolvency. The suit cites construction liens claiming overdue bills of around $2.8 million from the Radisson's development.

Grosskopf, in his court response, says the hotel is not insolvent.

The village requested a receiver to protect the hotel's value, revenue and operations because Raupp's lawsuit could interfere with the Radisson and its operations, Fitzgerald said.

Lodging Investors missed the first $700,000 payment on the village loan.

That payment was due earlier this month, and village officials "will be working with the receiver on that issue," Fitzgerald said. The village statement said Dizard is to collect hotel revenue and maintain the Radisson "for the benefit of the village and the hotel."

Professional Hospitality was evicted this year from its Madison offices and now operates out of Grosskopf's Waunakee home, according to online court records.

Grosskopf also faces a $401,402 judgment pending from a foreclosure suit that targeted a commercial building in Westport, and judgments totaling $548,363 over a Sturgeon Bay condominium that's facing foreclosure.

Those lawsuits don't reflect on the financial performance of the Radisson and its ability to repay the village loan, Fitzgerald says. He said the first loan payment was overdue mainly because the hotel opened three months late in May, instead of Feb. 28, as planned.

Fitzgerald also said the fact that Radisson Hotels agreed to the receivership shows that the franchiser has confidence in the hotel's viability. Radisson is supporting the receivership as long as the hotel meets the franchise agreement's operating standards, company spokeswoman Rosanne Swanson said.

The Village Board in April 2010 voted to finance the conversion of the dilapidated former Falls Inn into the Radisson. The $17.65 million loan, plus interest, is to be repaid by 2026, with $4.1 million in principal due over the next four years.

The board took that action after Grosskopf and his partners started the project in 2008 but were unable to obtain private financing to complete the conversion when global financial markets nearly collapsed that year.

Without the village loan, the project probably would not have been completed for several years, which would have left a high-profile eyesore, Fitzgerald and other village officials said.

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