How About Flipping The Hotel Where The TCI Convention Will Be Held

Think you have foreclosure talent?

I'd like to see someone flip this property, the Orlando hotel where the TCI convention will be held:

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The 626-room Grosvenor Resort at Walt Disney World Files for Bankruptcy; Unable to
Repay $51 million in Debt By Jerry W. Jackson, The Orlando Sentinel, Fla.
Knight Ridder/Tribune Business News
Feb. 5--The Grosvenor Resort at Walt Disney World, weakened by the recent tourism downturn and unable to repay about $51 million in debt, filed this week for bankruptcy reorganization in Orlando

Under Chapter 11 of the U.S. Bankruptcy Code, the 626-room hotel can operate with protection from creditors while it crafts a turnaround plan.

"We intend to repay the debts and be out of bankruptcy soon," R. Scott Shuker, an Orlando bankruptcy attorney representing the hotel, said Wednesday.

"Payroll will be paid; no one will be let go," Shuker said, and the hotel will continue operating as usual, serving guests and taking reservations. It employs 303 people.

Shuker said the 19-story hotel, which is located on Disney property but independently owned, has seen its occupancy and revenue rise in recent months and foresees a financial recovery. But efforts to negotiate new financing with the hotel's lender failed. Orix Credit Alliance, a New York-based lender owned by a Tokyo company, filed for foreclosure on the property last June.

"We had a deal in principle, but we just weren't given enough time to raise the money," Shuker said. "It's actually a relatively healthy hotel."

Andy Brumby, an Orlando attorney representing Orix, could not be reached late Wednesday.

Shuker said the hotel owner, Grosvenor Orlando Associates, a San Francisco-based limited partnership, intends to repay the $49.9 million owed to Orix as well as another $1 million owed to unsecured creditors.

"We intend to pay 100 cents on the dollar over a couple of years," Shuker said.

Unlike the Hyatt Orlando, which recently had to close its doors for lack of revenue, Shuker said, the Grosvenor has enough cash and cash flow to operate. The hotel had $1.3 million in cash on hand at the time of the filing early this week, Shuker said, and is current with major bills such as its ground lease with Disney.

The bankruptcy petition lists assets of between $10 million and $50 million, but Shuker said the true value is difficult to pin down in part because of the ground lease.

Recent appraisals valued the hotel at between $44 million and $60 million. The higher appraisal was made before the Sept. 11, 2001, terrorist attacks pummeled the travel industry, but Shuker said the hotel and the market have recently rebounded.

"All the trends have been up," he said, but the hotel's occupancy and room revenue estimates were not available.

The hotel at 1850 Hotel Plaza Boulevard opened in 1972 as the Americana Dutch Resort, one of the first hotels on Disney property. After a decade, the hotel suffered from age and heavy use and was acquired in 1986 for $33 million and refurbished by the current owners.

A strike by union workers at the hotel in 1996 led to a lengthy legal battle and the eventual reinstatement of about 50 workers in 1998. The employees were fired during the strike, but an administrative law judge ruled that the firings were improper. Demands for back pay are ongoing.

Shuker said all the union issues have been resolved and any back-pay claims outstanding would be handled through the bankruptcy court. The case has been assigned to Bankruptcy Judge Arthur B. Briskman.

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