An unfinished Homewood Suites by Hilton hotel at 12150 Grant Circle in Thornton is seen on Thursday, March 28, 2024. (BusinessDen file)
A nearly finished hotel project in Thornton has filed for bankruptcy to stop a foreclosure sale after an Adams County judge refused to do so at a hearing earlier this month.
The Homewood Suites by Hilton at 12150 Grant Circle ran over budget and over schedule before stalling out in the spring. That’s when a receiver was appointed to oversee construction at the request of State Bank of Texas, which is owed $32.5 million that it loaned the project.
“It is State Bank of Texas that has saved this hotel,” District Court Judge Art Hernandez said at a Nov. 5 hearing on the hotel’s future, “and has resulted in this hotel having a value today that is significantly higher than it was in March. They have put in a lot of capital.”
As the project nears completion, the bank has sought to foreclose on the property and wipe away the bad debt it has been carrying, bank President Sushil Patel said at the hearing.
“This bank was started in 1987 and this is the largest bad loan in the history of our bank,” he testified. “You could imagine the pressure that regulators are putting on us to exit from this. It amounts to almost 10 percent of our entire bank’s capital. This is our livelihood.”
For months, it appeared the foreclosure sale would occur Nov. 6 without objection. But then, a smaller lender, Lincoln Capital Management, filed an 11th-hour motion to stop the sale. A hearing was held in Hernandez’s courtroom one day before the scheduled sale.
“This hotel is just about done,” said Lincoln lawyer Steven Abelman. “What is the rush?”
“Why in the world would you foreclose when the hotel is about to open, is about to create a revenue stream, and needs a little bit of time to stabilize its revenue and achieve its true market value? I mean, this is just an unnecessary and rash action,” Abelman argued.
Brian Ray, an attorney for State Bank of Texas, accused Lincoln of intentionally “sitting on their hands and doing nothing” until the eve of the foreclosure sale. He urged Hernandez to allow the foreclosure process to play out: “We are at the finish line. Literally the one-yard line.”
And Hernandez did. The judge expressed regret that the project’s co-lenders were not working together and acknowledged that a sale could benefit State Bank of Texas over Lincoln Capital, but said any such inequities could be resolved through litigation in his courtroom.
“Denial of (Lincoln)’s motion for a temporary restraining order is the appropriate action,” the judge said after taking a three-hour recess to weigh his decision.
But the next day, the hotel’s developer, Thornco Hospitality LLC, filed for Chapter 11 bankruptcy in Texas. County records show that the bankruptcy case paused the foreclosure sale.
An unfinished Homewood Suites by Hilton hotel at 12150 Grant Circle in Thornton is seen on Thursday, March 28, 2024. (BusinessDen file)
A nearly finished hotel project in Thornton has filed for bankruptcy to stop a foreclosure sale after an Adams County judge refused to do so at a hearing earlier this month.
The Homewood Suites by Hilton at 12150 Grant Circle ran over budget and over schedule before stalling out in the spring. That’s when a receiver was appointed to oversee construction at the request of State Bank of Texas, which is owed $32.5 million that it loaned the project.
“It is State Bank of Texas that has saved this hotel,” District Court Judge Art Hernandez said at a Nov. 5 hearing on the hotel’s future, “and has resulted in this hotel having a value today that is significantly higher than it was in March. They have put in a lot of capital.”
As the project nears completion, the bank has sought to foreclose on the property and wipe away the bad debt it has been carrying, bank President Sushil Patel said at the hearing.
“This bank was started in 1987 and this is the largest bad loan in the history of our bank,” he testified. “You could imagine the pressure that regulators are putting on us to exit from this. It amounts to almost 10 percent of our entire bank’s capital. This is our livelihood.”
For months, it appeared the foreclosure sale would occur Nov. 6 without objection. But then, a smaller lender, Lincoln Capital Management, filed an 11th-hour motion to stop the sale. A hearing was held in Hernandez’s courtroom one day before the scheduled sale.
“This hotel is just about done,” said Lincoln lawyer Steven Abelman. “What is the rush?”
“Why in the world would you foreclose when the hotel is about to open, is about to create a revenue stream, and needs a little bit of time to stabilize its revenue and achieve its true market value? I mean, this is just an unnecessary and rash action,” Abelman argued.
Brian Ray, an attorney for State Bank of Texas, accused Lincoln of intentionally “sitting on their hands and doing nothing” until the eve of the foreclosure sale. He urged Hernandez to allow the foreclosure process to play out: “We are at the finish line. Literally the one-yard line.”
And Hernandez did. The judge expressed regret that the project’s co-lenders were not working together and acknowledged that a sale could benefit State Bank of Texas over Lincoln Capital, but said any such inequities could be resolved through litigation in his courtroom.
“Denial of (Lincoln)’s motion for a temporary restraining order is the appropriate action,” the judge said after taking a three-hour recess to weigh his decision.
But the next day, the hotel’s developer, Thornco Hospitality LLC, filed for Chapter 11 bankruptcy in Texas. County records show that the bankruptcy case paused the foreclosure sale.
