Two St. Louis-based developers, M.R. and his brother S.R., have filed bankruptcy for the third time, in an attempt to protect many of their businesses from creditors, as reported by St. Louis Today.
Roberts Companies filed the current bankruptcy on behalf of their Houston-area hotel. Speculators believe that Roberts' may add filings for five other hotels. All of the hotels are part of a legal fight between the brothers and Bank of America over a defaulted loan.
Reporters learned that the Roberts brothers filed for Chapter 11 bankruptcy protection in an effort to avoid foreclosure. Bank of America allege that the brothers owe $34 million that was leant to them for renovations for six of their Missouri area hotels.
Five of the hotels, according to the brothers, have foreclosures pending that were set in motion by Bank of America.
Roberts Companies own 11 hotels, four television stations and several real estate properties nationwide.
Their broadcasting company is already in bankruptcy and is seeking buyers for at least one of their TV stations to allow them to pay back their creditors.
In the filing the brothers have outlined plans to maintain ownership of as many properties as possible while seeking to secure a hedge fund or another sizeable investor. They have calculated the equity for six of their hotel properties – currently at stake in the Bank of America foreclosures – to be approximately $35 million.
In claiming that the hotels are worth more as a group to investors, the Brothers state that they have invested $135 million of their own money in acquisition and renovations and an additional $11 million for operating losses in all 11 hotels.
M.R. said, "Bank of America is coming at us hard. We're looking for a forum to present a business plan, but we need cooperation from the lender to present that plan."
Efforts to bring in new management and capital, according to the brothers, were thwarted by Bank of America's lawsuit.
The bankruptcy was filed in St. Louis federal court. It lists Roberts Hotels Houston LLC as having up to $50,000 in assets and an estimate between $10 million and $50 million in liabilities.
Other hotels involved in the Bank of America dispute include locations in Atlanta, Dallas, Shreveport, La., Spartanburg, S.C., and Tampa, Fla.
The strategy in filing for bankruptcy now is to give the brothers time to lower their debts while seeking new capital.
The brothers have been working with Bank of America for many decades, and according to S.R., had almost $70 million in loans and accounts at one time.
The brothers blame their shrunken hotel revenues on a soft economy that caused several hotels to loose bookings. During the time they continued to make their interest payments on their bank loans. However, when they failed to pay their hotel's property taxes – as they were waiting for things to improve – the loans defaulted.
As to why Bank of America no longer wants to work things out, M.R. said, "Pretend and extend — those are the magic terms out there these days — give us some breathing room, as good entrepreneurs, to respond to this economy. We know they are out there doing this (extending loan terms) for other people."
Spokeswoman Shirley Norton for Bank of America responded by saying, "That's not true. The bank had been working with the brothers for some time to help them resolve their financial issues. The details of those efforts are included in the lawsuits."
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