CHARLOTTESVILLE, Va.--()--Minor Family Hotels, LLC, owner of the Landmark Hotel project in downtown Charlottesville, announced today that in order to more quickly resolve the burdensome lawsuits that have prevented it from completing construction and putting people back to work, the Company has voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
“It is unfortunate that our lenders and the FDIC have forced us to take this step. However, the Chapter 11 process provides us with the most expeditious manner in which to resolve the litigation that has effectively shut down the project and put people out of work.”
The petition was filed September 1, 2010 in the U.S. Bankruptcy Court for the Western District of Virginia in Lynchburg. The case number is 10-62543.
“Our goal is to complete this project, save taxpayers additional costs, and provide much needed jobs for the community as well as bolster local businesses by completing this first-class hotel,” said Chief Executive Officer Halsey Minor. “I am committed to seeing this through and the Chapter 11 process allows us to resolve the legal disputes delaying this important project for my hometown.”
The Landmark Hotel, located in the historic Downtown Mall, has been embroiled in eight lawsuits in two states for the past 18 months. In July, an arbitrator found that the developer had made material misrepresentations and omissions regarding the Landmark Hotel’s construction budget and misrepresented true costs to Minor Family Hotels.
Litigation over Specialty Finance Group LLC’s (SFG) refusal to honor its contractual commitments to provide $23.6 million in construction funding continues in state courts in Georgia and Virginia. SFG’s parent, Atlanta-based Silverton Bank, was seized in 2009 by the Federal Deposit Insurance Corp. (FDIC), which has continued to fight the case at significant expense to taxpayers.
“After 18 months and significant costs, the Company is no closer to resolving the litigation surrounding this project,” said Mr. Minor. “It is unfortunate that our lenders and the FDIC have forced us to take this step. However, the Chapter 11 process provides us with the most expeditious manner in which to resolve the litigation that has effectively shut down the project and put people out of work.”
The Company said that Chapter 11 channels the disputes into a single court, the U.S. Bankruptcy Court for the Western District of Virginia in Lynchburg. The Company believes Chapter 11 will streamline the process, ensuring that the judicial system’s valuable resources are not wasted on duplicative litigation.
“Minor Family Hotels will continue to aggressively prosecute claims against the lender for failing to honor their contractual commitments and colluding with the developer and general contractor to defraud the Company,” Mr. Minor said. “The damage caused by the bad faith of the lender, developer and general contractor has not only caused financial hardship to Minor Family Hotels and the independent contractors that were hired to build it, but also the U.S. taxpayers who have been funding the FDIC’s refusal to resolve these cases and put people back to work.”