|By Rick Daysog, The Sacramento Bee,
Calif.McClatchy-Tribune Regional News
Feb. 04, 2012--The day before it was headed for the auction block, the owner of Le Rivage Hotel placed the financially troubled riverfront hotel under bankruptcy protection.
On Thursday, the luxury hotel's parent, Captain's Table Hotel LLC, filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Sacramento, listing debts of between $10 million and $50 million.
The filing staves off a foreclosure sale that was scheduled Friday by the hotel's lender, Pasadena-based One West Bank.
Chapter 11 buys time for the hotel owners to find new financing, restructure their loan or find a buyer for the 101-room boutique property.
Local developer Robert Cook, the hotel's managing shareholder, did not return calls to his office.
Calling itself a "first-class hotel with an Italian and French Riviera" theme, Le Rivage opened in January 2008 and has struggled ever since as the global economic meltdown took its toll on the region's hospitality and real estate industries.
Le Rivage's remote location in the Little Pocket neighborhood on the Sacramento River and its heavy debt load also contributed to its difficulties, hotel industry experts said.
"It's not in a great location for a hotel ... and it was an expensive hotel to build," said Tom Callahan, CEO of PKF Consulting USA in San Francisco.
In its bankruptcy filings, the hotel's parent said it owed One West Bank $30 million. Hearn Construction of Vaca-ville, which is owed $404,862, was the second largest secured creditor.
In all, the company said it owed money to between 50 and 99 businesses and individuals.
The bankruptcy filing will have little impact on hotel employees and daily operations, but it will return day-to-day control to its owners.
Until Thursday, Le Rivage had been under the management of a court-appointed receiver who was put in place after the hotel's developers defaulted on their bank loan in September 2010.
Callahan said Le Rivage has faced stiff competition from other local hotels, which slashed prices to deal with the economic downturn and the glut of new inventory in the region.
He noted that hotels in the Sacramento area added hundreds of rooms in recent years.
In general, Sacramento's hospitality market has lagged the statewide industry, which is in full recovery mode, Callahan said.
According to PKF, occupancy rates at Sacramento hotels during the 11 months ending November 2012 stood at 65 percent, a 2.7 percentage point increase from the year-earlier period.
Average local daily room rates through November were about $91.70, a 1 percent increase from the previous year.
Statewide, occupancy rates have increased 4.5 percentage points to 73.5 percent during the January to November period while room rates are up 9.4 percent to $139.06 per night, PKF said.
Call The Bee's Rick Daysog, (916) 321-1207.
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