TRENTON, NJ-The city-owned Lafayette Yard Hotel and Conference Center here is $30 million in debt and is seeking Chapter 11 bankruptcy protection.
Bankruptcy court documents made public this week say the 97-room hotel needs a “breathing spell from its creditors.”
A public board oversees the hotel – opened in 2001 as the Trenton Marriott and renamed last June – and has projected an $880,000 operating deficit by the end of the year. Meanwhile, the unprofitable hotel has failed to pay debt service on construction bonds, including $13.3 million in city-backed debt.
According to court documents made public yesterday, the Lafayette board filed for Chapter 11 to obtain a “breathing spell from its creditors.” It asks the court to give permission for it to borrow money to keep the hotel running during the bankruptcy process
According to documents, the board could not find a lender willing to make a loan unless it is protected through a structured bankruptcy and sale of the hotel.
The Lafayette's biggest debt of more than $21 million is owed to Wells Fargo Bank and the Trenton Parking Authority. Other large creditors include food service companies – including Starbucks – and DirecTV and USA Today. But money is owed across the board: to several utility providers, to Acquest Realty Advisors which managed the former Marriott-brand hotel, and even to its laundry service.
If the court approves Chapter 11 proceedings, it would oversee financial restructuring – and the potential sale of the hotel – during a period when debt-paying is suspended. Trenton's mayor, Tony Mack, has directed the Lafayette board to sell the hotel.
The Lafayette board said in filing documents that it is seeking Chapter 11 as the only way to “insure that an orderly and maximum sale is possible.” The board is asking to sell the hotel at a public auction.
Judge Michael Kaplan is expected to take up the case in November.
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