NACOGDOCHES, TX (KTRE) - S.E. Pack Hospitality Limited Partnership, the entity that closed Hotel Fredonia, filed for Chapter 7 bankruptcy Tuesday morning in U.S. Federal Court in Lufkin.
S.E. Pack Hospitality LP owes close to $1.8 million in unpaid principal, interest, and late fees to Texas State Bank. In addition, over $76,000 is owed in back taxes and over $50,000 is owed in insurance, according to foreclosure documents filed by Texas State Bank.
Multiple federal tax liens dating back to December, 2012 have been levied against the hotel. The most recent is for more than $144,000.
The filing came just minutes before a foreclosure sale on the third lien was to be sold on the Nacogdoches County courthouse steps.
"On the way to the foreclosure sale, outside the parking lot of the Nacogdoches County Courthouse, Keith Swearingen, the trustee under the deed of trust for Texas State Bank, received an e-mail from the law firm of Searcy and Searcy out of Longview indicating the emergency Chapter 7 proceeding," said Paul Clark, an attorney for Texas State Bank.
Clark said the benefit to S.E. Pack Hospitality LP is that the move will delay the proceedings.
"The bankruptcy filing constitutes an automatic stay of all foreclosure procedures and anything that happens past this point will have to be under the jurisdiction and consent of the bankruptcy court in Lufkin, Texas," Clark said.
Clark said the bankruptcy filing will further slow down the process of finding a buyer for Hotel Fredonia within the next 45 days.
In addition, the filing also hinders any possible negotiations with the second lien lender, Greater Texas Capital Corporation, a non-profit Small Business Administration lender.
"In some cases they do proceed with a purchase and a buy out to protect the interest, but every case is evaluated on individual basis," said Todd Buchanan, the president of Greater Texas Capital Corporation. "Bankruptcy will change the view of that, and we'll reconvene on it."
Chapter 7 bankruptcy may wipe out some debts for Hotel Fredonia owner Susan Pack Reents, but not all. Multiple federal tax liens dating back to December, 2012 have been levied against the hotel. They total more than $600,000.
Bankruptcy is a logical move for the company, but to the lenders ...
"It definitely is a hindrance and slow down at this point in time," Clark said.
Hotel Fredonia closed in November, 2013. Reents attributed the economy and lost accounts for its closure. Community-led investors opened Hotel Fredonia in 1955. It's had several owners over the years. This is the second time the iconic facility has closed due to financial reasons.
The East Texas News will continue to investigate the matter. A full report will be on East Texas News at 6 p.m.