A partnership that owns four Annapolis inns housed in restored historic buildings, as well as one of the state's best-known restaurants, has filed for protection from creditors under Chapter 11 of the federal bankruptcy code.
Historic Inns of Annapolis, L.P., said in a filing last week that it owes creditors more than $10.7 million but has more than $13.7 million in assets. General partner Paul M. Pearson II said yesterday thatthe partnership made the bankruptcy filing to protect itself against cash-flow problems that threatened to lead to a foreclosure on a $6.6 million first mortgage on the properties.
"All we need is breathing time," Mr. Pearson said, adding that the partnership's Maryland Inn, Governor Calvert House, Robert Johnson House and State House Inn, as well as the Treaty of Paris restaurant, are continuing to operate.
He said there is "not a chance in the world" that the bankruptcy filing will lead to a decision to close the inns.
"It's in the Bankruptcy Code, but the word bankruptcy is misleading," he said. "The patient will be resuscitated by early spring, and we'll be fine."
Mr. Pearson said the partnership's cash-flow woes stem from the reconstruction of State Circle, a traffic circle in downtown Annapolis, which has made it nearly impossible to reach the Governor Calvert House and difficult to reach some of the other inns. Access to the Maryland Inn, which houses the Treaty of Paris, has been little affected, he said.
The road work has contributed to a decline in room revenue of 35 percent -- or about $270,000 -- compared with last year at the affected inns between the start of construction, about seven months ago, and July, Mr. Pearson said. Banquet revenue has fallen by $150,000, he said.
The Governor Calvert House was hit especially hard, he said, before work immediately in front of the inn was completed recently.
"You couldn't get a car or a bicycle or a woman in high heels anywhere near the place," he said. "You couldn't drive up to the front door for seven months."
The road work blocked the door of one inn, forcing customers to enter through a parking garage, afreight elevator and the kitchen, he said.