L.A. firm will buy Mark Antony
A Los Angeles-based partnership offered $1.9 million to win the Mark Antony Hotel in a U.S. Bankruptcy Court auction Monday.
We're delighted, said Richard Reisberg of Act Two Ltd., the winning bidder. We love the architecture and what it represents in Ashland.
Act Two will spend $10.3 million on the purchase and a yearlong renovation of the downtown Ashland hotel, said their attorney, Wilson Muhlheim of Eugene.
Reisberg said he'd been looking forward to acquiring the 70-year-old hotel since last April. The hotel closed in November when the city of Ashland shut off its electricity for nonpayment of a $6,000 power bill.
It will be a luxury boutique hotel, he said. I wouldn't look for anything radically different.
Reisberg and his wife, Judy, sat through the two hours of hearings in the U.S. District Court building in Medford.
Three suitors vied for the historic hotel, but the successful transaction was sorted out by Act Two and the hotel owner during a recess.
Owner Joe Burkhardt, president of Stand- Corp. of Reno, brought the hotel to bankruptcy court in April, seeking protection from creditors under Chapter 11 of the U.S. Bankruptcy Act.
Stand- filed a plan for reorganization in November. Meanwhile, Act Two bought a creditor's interest and filed its own reorganization plan.
Faced with two plans and promises of additional offers on the hotel, Judge Albert Radcliffe ruled the hotel would be auctioned. He left his home court in Eugene to conduct the auction in Medford.
Two formal bids were offered:
Doug Irvine of Ashland, representing Commercial Ventures Inc., offered $1.525 million for the hotel.
Leonard Gotshalk, a Klamath Falls cattle rancher with a home in Ashland, offered a total of $3 million on behalf of Pearland, a Texas partnership. He said the partnership would provide $1.6 million immediately and the balance later.
Although Act Two did not submit a bid, it was in the running with its original reorganization plan -- a $1.325 million offer for the building and provisions to turn the contents over to a trustee for auction.
After reviewing the proposals, Radcliffe invited any improved proposals. Irvine offered $1.8 million.
The key to the sale was the buyers' ability to profitably operate the hotel, in hopes that subsequent owners won't haul a failing business back to bankruptcy court.
Gotshalk was first to testify, but said he did not bring documentation to the court. Pressed for details, he conceded to several conditions that remain to be met and finally said the partnership may not operate the hotel.
The session started at 11 a.m.; at noon Radcliffe recessed for lunch. When the court reconvened, Gotshalk's lawyer withdrew his proposal.
Stand-'s lawyer, Keith Boyd of Grants Pass, announced the $1.9 million settlement with Act Two.
Irvine offered $1.925 million, but he said his lawyers were trapped in California by storms. He said Commercial Ventures is seeking the Mark Antony as part of a $150 million real estate investment trust.
Chapin Hunt, an investment banker with Heitman Financial of Beverly Hills, Calif., said his firm has approved a loan to Act Two for the purchase.
Radcliffe recessed the court for 30 minutes to sort out the offers and returned to rule for Act Two.
Irvine, who had moved his family to Ashland from Southern California last year, said he was pleased to see Act Two land the hotel.
It's a challenging property, he said. It's nice to see it go to someone with money that is qualified to turn it around.
As part of the agreement, steps will be taken to rearrange creditors so that about $1 million in claims will be paid to a variety of creditors ahead of three large claims. Those three claims are a $1.4 million federal tax lien against the hotel for the balance of Burkhardt's
1986 personal income taxes; claims by Burkhardt himself; and a $970,000 claim by JBA Leasing, one of Burkhardt's companies.
The $1.9 million price will more than cover other creditors' claims, which include $39,700 in property taxes, $658,000 to Pacific Coast Investments, $19,500 in back pay to former employees, $23,638 to the city of Ashland, $170,000 in estimated administrative expenses and $148,000 to others.
Paul Garrick, of the Office of the U.S. Bankruptcy Trustee, asked the judge to require the action to convert to a Chapter 7 liquidation if the sale isn't closed within 45 days.