An attorney for the corporation that owns the Parker Inn said he expects to stop a pending foreclosure action against the downtown boutique hotel by filing a new petition for federal Chapter 11 bankruptcy protection.
Attorney Richard Weiskopf said he will file the new petition prior to Sept. 21, the date set by the Supreme Court of New York in Schenectady County to sell the 434 State St. property.
Christopher Myers is the principal managing partner in Parker Building LLC, which owns the Parker Inn.
“The new filing will put us on equal footing with the lender, so that the bankruptcy process will do what it is intended to do,” Weiskopf said. “This protects the entity and allows the entity to continue on and to renovate and upgrade” the hotel.
First Niagara Bank, which holds a first priority mortgage on the property, initiated foreclosure proceedings. It is owed $596,715, of which $305,952 is unsecured. Other creditors are the Empire State Certified Development Corp., formerly the New York State Business Development Corp., owed $669,305, the full amount of which is unsecured; and the Metroplex Development Authority, owed $683,912, the full amount of which is unsecured.
First in line for any repayment is American Tax Funding, which holds a lien for $125,038 in unpaid property taxes. Parker Building also owes $15,741 in 2010-11 city and county taxes and $43,457 in 2010-11 school taxes.
The corporation owes Myers $214,700, plus $42,000 to his development corporation, Concord Development. Both amounts are unsecured. The corporation also owes $3,000 to four small investors, also unsecured.
Parker Building filed a voluntary Chapter 11 petition in May in United States Bankruptcy Court, Northern District of New York, listing $953,000 in assets. The amount includes the assessed value of the Parker, totaling $475,000, plus $476,000 in accounts receivable the inn owes the corporation.
The corporation, however, decided to withdraw and amend its petition shortly after filing it, following objections from First Niagara to Parker Building’s request for “emergency use of cash collateral.” The corporation wants to use cash collateral, or revenues collected through rents and leases, to convert the hotel to a long-term extended stay facility.
In court papers, First Niagara attorneys said Parker Building should not be allowed to use the “bank’s cash collateral” without its consent, as the bank “presumes” Parker Building will use the cash for purposes other than repaying the bank, and that Parker Building has failed to produce “any reasonable plan to reorganization.” The bank calls the conversion plan “speculative.”
ATF also filed an objection against the corporation’s cash collateral request. It said in court papers that Parker Building wants to use cash collateral indefinitely and that ATF believes the corporation should be granted use of cash collateral for no longer than one month.
Weiskopf said Parker Building is considering the filing of a reorganization plan and disclosure “right away. That is normally not done for three or four months.” He also said the new petition may be filed “under seal, because it contains some confidential information.”
In June, Myers said a bankruptcy filing was inevitable. He said the 23-room boutique hotel suffered from cash flow problems, mounting taxes and the recession. According to the court filings, the Parker Inn’s monthly estimated gross income totaled $9,200 and expenses totaled $26,000. Myers said he plans to convert the hotel into a mix of studio, one- and two-bedroom apartments, catering to corporate clients.
Weiskopf said there is also interest in leasing the restaurant on the first floor, rather than Myers continuing to operate it. He said the corporation hopes to emerge from bankruptcy in January.
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