The owner-developer of downtown Baltimore’s historic B&O building has filed for Chapter 11 bankruptcy stemming from its conversion of the property into a boutique Hotel Monaco.
Baltimore & Charles Associates LLC sought bankruptcy protection July 12 in the U.S. Bankruptcy Court in Baltimore, a day before it was due in court to defend itself from several contractors seeking $630,000 in unpaid wages on the hotel project.
The developer, which owns the building but not the Hotel Monaco that occupies it, will now try to restructure several million dollars in debts it took out to buy and renovate the former headquarters of the Baltimore and Ohio Railroad, said Lawrence J. Yumkas, an attorney with Yumkas, Vidmar, Sweeney & Mulrenin, LLC, of Annapolis who is representing the developer.
The developer’s largest secured creditors include Capmark Bank, which lent it $48 million in 2007 for the project, and National Penn Bank, which loaned another $11 million.
Yumkas said the operation of the hotel and the B&O Brasserie that also opened in the B&O building should not be affected by the bankruptcy plans. The Monaco, which opened last July, is owned by Kimpton Hotels & Restaurants of San Francisco.
The development company, managed by Philadelphia’s ARC Wheeler, spent about $60 million to renovate the B&O building into a 208-room hotel. Benjamin F. Miller, co-founder of Philadelphia consulting and outsourcing firm Hospicomm, is a principal in the project, Yumkas said.
The bankruptcy suit is an outgrowth of an involuntary bankruptcy petition filed in April by the project’s general contractor, James M. Jost & Co. of Columbia, and three of its subcontractors. The companies are seeking $1.8 million in unpaid wages, according to court documents.
In a Chapter 11 filing, a company will seek to renegotiate the terms of its debts without fear of foreclosure or other penalties. With an involuntary bankruptcy petition, a group of creditors petition bankruptcy court for approval to impose a Chapter 11 on a company that owes it money.
Instead of converting the case to a Chapter 11, Baltimore & Charles could have continued to challenge the petition or moved to convert the case into a Chapter 7, under which it would sell off its property to repay its debts.
The contractors’ attorney, Lawrence P. Block of Stinson Morrison Hecker LLP of Washington, D.C., said he hopes his clients will be able to collect their fees in the bankruptcy process.
Baltimore Business Journal — by Daniel J. Sernovitz Staff