CHARLESTON, W.Va. — A company that filed bankruptcy over a Morgantown hotel has asked for more time to provide its financial information to the court system, in part because of complications caused by Hurricane Irma.
Mountain Blue Hotel Group, which owns the Hilton Garden Inn at Suncrest Plaza, filed its request for an extension on Thursday in federal court in Georgia.
A bankruptcy for a sister company that owns hotels in Clarksburg and Elkins was thrown out of court earlier this summer when those required financial statements were never submitted.
All of the hotels are owned by limited liability corporations headed by developer William Abruzzino, a Shinnston native now living in Florida. Additional Abruzzino properties, including Crossings Mall in Elkview, are also going through bankruptcy.
The loans and lawsuits over the hotels also include the listing of investor AA Properties, a 50-50 partnership of U.S. Senator Joe Manchin and his longtime aide Larry Puccio. Their representatives have said their listing was a mistake, but the matter has never really been clarified.
Mountain Blue Hotel Group filed bankruptcy on Sept. 13, after its lender had notified it of the upcoming auction of the Hilton in Morgantown.
The next day, the federal clerk filed notice that Mountain Blue’s initial filing was deficient. Federal court officials still needed names and addresses of all creditors, a statement of financial affairs, a list of 20 largest unsecured creditors, a list of equity security holders and more.
Court officials said most of the materials were to be submitted by Sept. 27 or the case would be dismissed without further notice or opportunity for hearing.
On Thursday, Mountain Blue asked for an extension. Its lawyers cited Abruzzino’s business and financial records located in Bonita Springs, Florida.
“The area surrounding debtor’s business took a direct hit from Hurricane Irma beginning Sept. 10, just three days prior to the filing of the petition,” the lawyers wrote. “Debtors managers had to pack up the business office prior to the arrival of Irma and they were not able to move back in the office until several days after the filing of the petition.
“Bonita Springs suffered major flooding for several days after Irma moved out of the area. Debtor’s managers were finally able to access the office on the weekend of September 16-17, and begin reconstructing the computers and files.”
The lawyers want the deadline to file financials be extended through Oct. 9.
Mountain West, the sister company that filed bankruptcy this past spring over hotels in Clarksburg and Elkins, had its reorganization case thrown out because it never filed the required financials.
Mountain West filed Chapter 11 bankruptcy on May 12, also in the U.S. District Court for the Middle District of Florida.
On May 16, the federal clerk provided notice that Mountain West, too, had a deficient filing — also noting that the case may be dismissed without further notice or hearing if the information was not provided.
The clerk asked for materials such as a statement of financial affairs, a corporate ownership statement and a list of the 20 largest unsecured creditors.
On May 26, lawyers for Mountain West filed a request for more time. Mountain West said it had been working on gathering the information but was unable to complete the documents prior to deadline and needed until June 5.
Just a couple of weeks later, June 5, the federal judge granted the request for more time.
But Mountain West never did get its stuff together for the court.
By this past July 18, the United States trustee filed a motion to dismiss Mountain West’s entire bankruptcy case “for the reason that the debtor has failed to comply with United States Trustee Guidelines and amend its schedules and statement of financial affairs.”
The motion continued, “The debtor’s lack of compliance with the guidelines prevents the United States Trustee from properly administering the case.”
And, finally, in a short order issued July 31, U.S. Bankruptcy Judge Caryl E. Delano in Florida dismissed the case.
An automatic stay of an earlier lawsuit against Mountain West was terminated, allowing trustee Deutsche Bank Trust Company to resume its case, including the pursuit of receivership for the hotels.
Just a couple of days later, in the resumption of the federal civil suit, receivers were appointed for the Clarksburg and Elkins properties.
Before bankruptcy was filed this month in the Morgantown hotel case, the lender asked for a receiver be appointed right away, claiming the hotel’s financial situation was at a tipping point.
The bankruptcy filing automatically halted all other civil court action, such as the receiver request and another request to proceed with potential auction of the hotel.
“A receiver is needed immediately to stabilize the property,” wrote lawyers for U.S. Bank National Association.
That came after the Monongalia County Sheriff’s Department raided the Hilton, seizing cash and checks in the registers and marking furniture as property to be taken in exchange for back taxes due to the county.
That raid was mentioned in court documents filed by the lender, with a quote from Monongalia County Sheriff Perry Palmer saying he’d expected more of a fight from Mountain Blue.
“Mountain Blue has had numerous opportunities to pay its tax bill, but the county has largely been ignored,” Palmer was quoted in court documents as saying.
“We had a little bit of correspondence with them. It’s pretty much been ignored. The judgment was rendered in court circuit court and they didn’t even show up for that.”
In a request to proceed with auction of the Morgantown hotel, lawyers for the lender wrote that they were concerned that Mountain Blue had fallen farther behind on its Hilton franchise agreement, hadn’t paid for insurance due and appeared to be falling behind on deposits into a control account required by the loan document.
“Lockbox receipts for August and September have been virtually non-existent, leading plaintiff to believe that defendant has been diverting funds from the lockbox,” the lawyers for the lender wrote.
The lawyers wrote that allowing Mountain Blue “to remain in business and continue to thwart payment to its creditors, including taxing bodies, does not serve the public.”
They concluded that if the hotel’s Hilton franchise agreement is lost or if the property is shut down, the property would lose significant collateral value.
More recently, in bankruptcy proceedings, the hotel was allowed to use cash collateral of no more than $27,000 to meet its Sept. 15 payroll for employees, reserving the likelihood of using more collateral for additional future expenses to keep the hotel running.