Belvedere now closer to auction block Florida developer Hertz fails to post money to buy hotel by court deadline

December 27, 1990|By Patrick Gilbert | Patrick Gilbert,Evening Sun Staff

The Belvedere Hotel moved closer to the auction block today after Florida developer Judah Hertz failed to meet a court-ordered deadline to complete his purchase of the historic midtown landmark.

U.S. Bankruptcy Judge James F. Schneider ordered Hertz a week ago to settle on the hotel by 10 a.m. today by posting the approximately $5 million needed to complete the sale.

A Baltimore City Circuit Court judge granted a request from Meritor Bank of Philadelphia, which holds the first mortgage on the Belvedere, to schedule a foreclosure sale of the hotel at 1 p.m. today.

The hotel was purchased in 1975 by One East Chase Street Associates Limited Partnership, led by Baltimore developer Victor Frenkil. The partnership filed for bankruptcy last year and Hertz stepped forward to buy the hotel for $5.5 million.

Schneider and the city's Board of Estimates approved the sale in October.

"The deadline has passed and I haven't heard from Mr. Hertz, nobody has handed me a check and no one has prepared a deed," said John J. Hentschel Jr., chief of the city's real estate division, adding: "We're going to have an auction."

Had Hertz completed the sale, the city would have recouped $1 million owed it by One East Chase and taken control of the Belvedere's restaurants and ballrooms, which officials say are worth at least $3.5 million.

The remaining $4.5 million from Hertz would have gone to Meritor Bank.

If the top bid price at the foreclosure sale falls below the $5.5 million purchase agreement, Davies said, he probably would return to Bankruptcy Court and ask Schneider to order Hertz to pay damages to make up the difference.

If no bid is made at auction, Meritor could opt to buy the building itself or take control of the hotel and try to sell it privately.

Schneider issued his order to Hertz at a hearing in response to a complaint filed in court by Kenneth F. Davies, the court-appointed trustee for the bankrupt hotel.

Davies' complaint asked Schneider to order Hertz to live up to terms of the purchase agreement and asked Schneider to order an immediate settlement on the hotel.

The complaint also asked the judge to enjoin Hertz or any of his business enterprises from participating in any foreclosure auction of the hotel and to award monetary damages if Hertz does not buy the property.

Schneider denied the injunction request and deferred action on damages until after Dec. 27.

Earlier this month, Davies said Hertz was trying to walk away from the deal. If that is so, the developer would stand to lose the $200,000 deposit he paid Meritor Bank of Philadelphia when he signed the purchase contract. Hertz also would have to pay whatever damages the court might impose on him if the sale does not go through.

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