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Hagerstown hotel seeks bankruptcy protection

August 10, 2009|By ARNOLD S. PLATOU

HAGERSTOWN -- Owners of the Hagerstown Hotel & Convention Center filed for bankruptcy protection Monday after a deal with the hotel's largest creditor fell through, an official said.

Watchwood LLC, which operates the 1910 Dual Highway hotel, and Bahman Inc., which owns its 6-acre site, filed with the U.S. Bankruptcy Court in Greenbelt, Md., for Chapter 11 protection to reorganize the hotel's debts and continue to stay open.

Farhad Jabberi, general manager of the hotel, said the tentative deal that had been worked out with lender BB&T collapsed, forcing the owners to go to court to prevent BB&T from foreclosing on the hotel.

"Even this morning, we thought that we could" reach a deal, Jabberi said. "We were trying to work with the bank. ... As of yesterday, we thought that the bank was going to work with us."

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Now, Jabberi said, the hotel will continue in business.

"All we want to do is to make sure we do good with our employees and be able to be a service to the community. That's what our orientation is. Everything will be better," he said.

"We always used to go out of our way to make sure we please our guests because we want those people to come back," Jabberi said. He said all reservations and commitments "will be honored and we'll be doing more to please them."

Craig Palik, a Greenbelt attorney, filed the Chapter 11 papers a little more than an hour before the hotel was scheduled to be offered for sale at a foreclosure auction. BB&T, based in Winston-Salem, N.C., is owed $5.5 million, according to the Chapter 11 papers.

"The bankruptcy has been filed to protect the hotel and to allow it to continue to operate its business," Palik said. "It's business as usual."

Representatives of BB&T couldn't be reached for comment Monday.

A hotel official said last Friday that a tentative deal had been worked out with BB&T. Sales Manager Roy Arnold said the auction wouldn't be held.

Monday morning, the auction was still listed as active on the Web site for American Auctions & Appraisals Inc., which was to hold the sale.

When asked about the bankruptcy protection filing Monday, Arnold said he didn't know details, but added that the hotel is "open, operating and booking business. I've booked four groups today."

The hotel -- with lodging, a restaurant and facilities for meetings -- is among four full-service hotels that are key to attracting conventions here, said Tom Riford, president and chief executive officer of the Hagerstown-Washington County Convention and Visitors Bureau.

"A convention can come to Hagerstown with, say, 1,500 people. They're going to fill up several hotels," Riford said last week. As a result, he said, "we are cheering from the sidelines that, hopefully, that hotel can make it."

Monday night, Riford said news of the Chapter 11 filing came as a "complete surprise" to his organization. "This, obviously, means it's more disappointing news for that once-great hotel," he said.

According to the papers filed in court Monday, the hotel's financial troubles "have stemmed from a variety of factors including, but not limited to, the current economic downturn and ineffective management services provided by a former hotel management company. As a result of these and other factors, the hotel's occupancy rates significantly dropped beginning in the fall of 2008, and continued through the early summer of 2009."

The papers said the hotel's business has improved "the last couple of months" and the prior management company has been replaced with an in-house manager.

Jabberi, who was hired about eight months ago, said the economy "is getting better, but it's not that great yet."

Last week, a hotel official said the hotel has 90 full- and part-time employees. But Jabberi said Monday that it has about 60 employees now. He said 90 is the number it can have at peak times of the year.

The current owners bought the hotel in 2006 for $7.4 million from longtime Hagerstown businessman Nick Giannaris. The hotel, which has 108 rooms, had been part of the Four Points by Sheraton chain.

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