Judge tosses Chapter 11 case in hotel dispute

A bankruptcy court judge has thrown out a reorganization case involving the owner of the former DeWi
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A bankruptcy court judge has thrown out a reorganization case involving the owner of the former DeWitt Clinton hotel, who had tried to strong-arm the State Room Banquet Hall out of a long-term lease.

U.S. Bankruptcy Court Judge Robert Littlefield on Thursday dismissed See Why Gerard LLC’s 5-month-old Chapter 11 case because the owner of the State Street building failed to file any operating reports required by the court in Albany.

Thursday’s dismissal could throw a wrench in See Why Gerard’s plans to restore the DeWitt as an upscale hotel. Between 1976 and about a year ago, the former 400-room hotel had served as low-income housing.

The dismissal will also provide a reprieve to State Room owner Tom Nicchi. He has spent months fighting his landlord’s attempts to breach his lease, which extends to as far as 2018.

“I’m a fighter. I’m not going anywhere,” Nicchi said.

See Why Gerard, whose sole investor is Chaim Ausch in Brooklyn, in April 2006 bought the circa-1929 building at the corner of State and Eagle streets. Except for the State Room, all of the building’s residential and commercial tenants have relocated.

Ausch argued that the $3,000 monthly rent paid by banquet hall operator Gramro Entertainment Corp. is far below market value. He added that hotel chains will not be interested in redeveloping the DeWitt unless it is completely vacant.

Gramro, which also operates the Comedy Works at the State Street location, signed a lease with the building’s former owner in 2003. That lease for 6,000 square feet is set to expire at the end of this year, but it includes two five-year renewal options.

Prior to filing for Chapter 11, Ausch unsuccessfully attempted to breach its lease and evict Gramro in Albany City Court. Ausch then moved to bankruptcy court in November to achieve the same goal.

In March, Littlefield ordered Ausch and Nicchi to try to resolve their dispute through arbitration.

“We did that, but they never came up with a number … to buy me out,” said Nicchi.

See Why Gerard attorney Richard Weiskopf and Ausch attorney Joann Sternheimer did not immediately return calls Friday seeking comment.

Pressure from Ausch prompted Nicchi to shop around for a new home for the elegant State Room. Locations he eyed included the former HSBC Bank at 126 State St. and the former Home Savings Bank at 11 North Pearl St.

Gramro estimated that it would cost $1.2 million to relocate the State Room to the HSBC Bank.

Nicchi said his most recent arbitration meeting came last week.

Nicchi said his slog with Ausch has already hurt his business in the form of cancelled events and legal fees. He has tried to counter this by running marketing campaigns involving billboard and other advertisements.

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