CHARLESTON, W.Va. — A lender asked that a second bankruptcy filing by the owners of a defaulting Morgantown hotel to be dismissed, saying the filing was made in bad faith.
“Simply put, Debtor Mountain Blue Hotel Group filed this bankruptcy case in bad faith to stave off a foreclosure of its primary asset and because of that and other reasons set forth herein, this case should be dismissed,” the lender wrote in a motion filed Dec. 29.
By this afternoon, the judge in the bankruptcy case had submitted an order denying the motion to dismiss.
The secured creditor says Mountain Blue Hotel Group owes it more than $15 million for Hilton Garden Inn in Morgantown.
Mountain Blue, which is an investment group led by developer William Abruzzino, has filed bankruptcy over the hotel twice in the past three months. Both times, the lender was trying to force foreclosure through a federal lawsuit.
The first case, filed in the Northern District of Georgia, was dismissed after 33 days because Mountain Blue failed to meet a deadline to provide its required financial information, particularly evidence of workers compensation insurance.
The second bankruptcy was filed in the Middle District of Florida.
“Debtor’s serial Chapter 11 filings in multiple jurisdictions is a clear scheme to delay and frustrate Secured Creditor’s foreclosure sale of the property,” wrote lawyers for the lender.
“Debtor’s blatant forum shopping, the dismissal of the Florida Bankruptcy Case should be with prejudice as the filing of this present case was in bad faith.”
This is the secured creditor’s second motion to dismiss in the current bankruptcy case. In the earlier motion, the creditor contended Mountain Blue did not have the authority to file bankruptcy because it had not provided proof that members of its corporation had all agreed.
Mountain Blue responded to that motion by providing the signatures of current members of the corporation.
The hotel loan resulted from an earlier bankruptcy of an Abruzzino-led corporation in 2012.
Mountain West Hospitality, another investment group led by Abruzzino, was dismissed from bankruptcy last year too. That corporation also failed to submit its financial information to bankruptcy court in a timely manner.
That case over hotels in Clarksburg and Elkins continued through a federal lawsuit filed in West Virginia. The lender successfully forced the sale of those two hotels, acquiring the ownership itself.
All of the hotels fell behind hundreds of thousands of dollars on their state and local taxes.
The State of West Virginia is suing both the lender and Mountain Blue in the case of the Elkins and Clarksburg hotels. The State Tax Department says the parties collected taxes from guests that weren’t passed on but instead were inappropriately commingled to pay other expenses.
In the case of the Morgantown hotel, the State Tax Department is acting as a creditor and, earlier, asked for the bankruptcy to be transferred to West Virginia.
The federal bankruptcy judge on Dec. 28 denied the motion for transfer.