SACRAMENTO, CA - One of Sacramento's consistently top-rated hotels is now among the capital city's many bank-owned properties.
After dozens of postponements, Le Rivage Hotel went back to the lender at a courthouse auction that went largely unnoticed.
OneWest Bank took the property for the opening bid price of $6.5 million at the May 2 trustee's sale.
The hotel was valued at $13.2 million in a recent appraisal, according to court documents.
Le Rivage has been operated since last year by a court-appointed receiver, Prism Hotels & Resorts of Dallas.
The hotel's general manager, Prism employee John Martin, said the ownership change would not impact day-to-day operations.
"It's business as usual," Martin said. "We're booking groups and making commitments well into the future."
Martin said the foreclosure sale had actually lifted the cloud of uncertainty caused by a Chapter 11 bankruptcy filing in February by the hotel's original owner, Captain's Table Hotel LLC.
"I think (the sale) is good for the hotel, good for the community, good for our employees and good for our guests," Martin said.
A federal judge allowed OneWest Bank to foreclose on the hotel despite the continuing bankruptcy case because the property was offered as security for the loan.
The luxury hotel on the Sacramento River opened near the peak of the recession and had trouble filling its more than 100 rooms, in part, because it is located in a residential neighborhood several miles from the central business district.
The original owner had been negotiating since 2009 to modify terms of the $30 million loan and filed for reorganization when the modification talks stalled.
OneWest Bank acquired the Le Rivage deed of trust following the collapse of the original lender, La Jolla Bank, in 2010.
Property records show the hotel is now owned by a subsidiary of OneWest Bank established for the sole purpose of holding title.
Despite the official ownership change, the original owner hasn't given up hope of getting the property back.
In a hearing set for May 30, Captain's Table Hotel LLC will argue that OneWest Bank failed to follow proper procedures leading up to the courthouse auction and therefore the sale should be rescinded.
Nevada City attorney Michael Nudelman, a court-appointed trustee representing unsecured creditors, opposed the bank sale because he believes the reorganization plan would have worked if given more time.
Nudelman said the best chance for unsecured creditors to recover the hundreds of thousands of dollars they are owed is through cash flow from the hotel's continuing operation.
Nudelman is also seeking assets he claims were improperly seized by OneWest Bank in the foreclosure.
"My goal is to get whatever I can for the unsecured creditors," he said.
by George Warren, GWarren@news10.net