NEW YORK -- The company that owns the Baltimore Inner Harbor Holiday Inn and seven other Holiday Inns around the Baltimore area has filed a pre-packaged bankruptcy plan with the federal bankruptcy court in New York.
The reorganization calls for lenders to provide up to $16 million for the renovation of these units with $6 million slated for the Inner Harbor hotel. Other Holiday Inns affected by the filing include hotels in Towson, Frederick, Glen Burnie, Linthicum, Pikesville and Baltimore-Washington International Airport.
Eight other Holiday Inn franchises in Connecticut and Pennsylvania were also included in the filing.
Conditions at all of the hotels have deteriorated significantly in recent years, undermining their appeal and contributing to low occupancy rates and diminished revenues, the filing said.
Approval of the additional financing is expected to occur March 18 while the company that owns the hotels is expected to emerge from bankruptcy April 28, the company said in its plan. The hotels will remain open for business, except for possible shutdowns because of renovations.
After months of negotiations, lenders have approved the transaction, according to court testimony, agreeing to accept lower interest rates and an extended repayment schedule on approximately $64 million in debt. Trade creditors, the largest of which is Baltimore Gas & Electric Co., owed $118,493, will be paid in full.
The restructuring comes after almost a decade of frenetic, and ultimately ill-fated, transactions in which the hotels bounced from one parent company to another.
In 1984, the 16 hotels -- half of which are in the Baltimore area -- were sold by American Motor Inns to Prime Motor Inns Corp., at the time a high-flying lodging company with a track record of fast growth.
It spun the hotels off two years later to a new company called AMI Partners L.P., which in turn was the sole asset of another company created at the time, Prime Motor Inns L.P. The newly formed partnership and the older corporation initially maintained tight financial and managerial ties but they traded independently on the New York Stock Exchange. In 1987, Prime Corp's shares touched $45.50 and Prime L.P.'s reached a high of $21.75.
By 1990, however, Prime Corp. was bankrupt and the company curtailed lease payments to Prime Motor Inns L.P., which had been accounting for nearly half the partnership's revenues. Prime Corp's shares yesterday closed at 3/8 ; Prime L.P.'s at 1/2 .
Soon after Prime Motor Inns Corp. declared bankruptcy, discussions began between Prime Motor Inns L.P. and its creditors. Much of the managerial overlap was severed and efforts to sell the chain were unsuccessful.
Day-to-day operations at the 16-unit chain were shifted from Prime Motors Inns Corp. to a Cincinnati-based hotel operator, Winegardner & Hammons Inc.
A report by Winegardner & Hammons, cited in the bankruptcy filing, contends that, on assuming control of the hotels, it found substantial renovation of the hotels were needed. Many had failed inspections by Holiday Inns and customer surveys gave the hotels the lowest rankings in their region.
In a balance sheet included in the original declaration of bankruptcy, the company does not assess the value of the hotels, but said that "in this economy" it agrees with lenders that they are not worth the amount owed on debts. Assets other than the hotels were valued at $9.5 million, debt at $64.4 million.
Renovations of the Inner Harbor Hotel are a priority, given its advantageous location near the new baseball stadium.