June 08, 2012--The principal owner of the financially troubled Radisson Hotel in Menomonee Falls has been temporarily barred by a judge from being on the hotel property.

James Heyden also is temporarily restrained from using or selling any of the assets pledged as collateral to obtain a $17.65 million loan from the Village of Menomonee Falls to develop the Radisson.

Waukesha County Circuit Judge Donald Hassin issued that temporary restraining order this week. It was requested by attorney Randall Crocker, who is representing the village in a receivership proceeding involving the Radisson.

At the village's request, Hassin appointed a receiver to oversee the hotel's operations in November.

As with the receivership, the restraining order was requested "to preserve the business operations of the hotel," Crocker said in a written statement, without elaborating.

The village believes the hotel will continue to operate during the receivership, and that the village will recover the money it's owed by the Radisson's owners, Crocker said.

The Radisson's ownership group, Lodging Investors of Menomonee Falls LLC, has missed the first two semiannual loan payments of $700,000 each owed to the village. Those payments were due in November and May.

Notes from this week's court hearing before Hassin include a reference to "drained checking accounts and payments not being made."

Crocker's statement didn't address that issue. Heyden's attorneys didn't respond to a request for comment.

The court file also said the attorney for Lodging Investors of Menomonee Falls, made up of Heyden and other investors, didn't object to the village's request for a restraining order.

In January, Village Manager Mark Fitzgerald said village officials were considering changes to the loan's terms that would allow Lodging Investors to delay making loan payments.

Fitzgerald also said then that the village still expected Lodging Investors to meet a November 2014 deadline of making a total of $4.1 million in loan payments.

Any change in the loan's terms would need Village Board approval. The entire loan is due in 2026.

The 135-room hotel on Main St., just west of U.S. Highway 45, is the target of several construction liens filed by subcontractors and suppliers with unpaid bills from the project.

The village requested the receivership last fall to pre-empt a rival receivership request from Madison investor Gregg Raupp.

Raupp is suing Professional Hospitality LLC, a Madison-area hotel management firm led by Dean Grosskopf, a Lodging Investors co-owner.

The suit, pending in Dane County Circuit Court, claims Professional Hospitality 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, and said money taken from the accounts was used by Professional Hospitality, which also manages the Radisson, to reimburse it for bills it paid on behalf of the Fairfield Inns' owners.

Raupp, in his lawsuit, also claims Lodging Investors is either insolvent or "in imminent danger of insolvency." In his court response, Grosskopf said the hotel is not insolvent.

The Village Board unanimously approved the Radisson loan in 2010.

Lodging Investors started renovations on the former Falls Inn in 2008 but could not get private financing to complete the conversion during the global financial crisis 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, village officials said. They said that would hurt efforts to redevelop properties on Main St., where projects include a retail center, anchored by a Walmart Neighborhood Market, that's under construction.

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