Bankruptcy judge quells efforts to take over three historic Annapolis inns Ruling reverses an earlier decision

October 31, 1993|By Consella A. Lee | Consella A. Lee,Staff Writer

A bankruptcy judge Friday temporarily halted a Dallas-based company's efforts to take over several historic Annapolis inns.

Judge E. Stephen Derby said an earlier decision allowing the takeover by Chequers Investment Associates showed a "lack of familiarity with the entire case."

The July 22 decision, issued by Thomas James, a Chicago judge called in to help with a backlog of bankruptcy cases, would have taken ownership of three Annapolis landmarks -- the Maryland Inn, Governor Calvert House and Robert Johnson House -- out of local hands.

Judge James had based the decision on what he called secret and "reprehensible" acts by two principals in the inns' limited partnership, which holds the buildings' second and third mortgages.

Friday's ruling "puts us back in control," said Joel I. Sher, a lawyer for the Historic Inns of Annapolis Limited Partnership.

"It would have been tragic for the employees and heart-wrenching to me if the inns had been lost," said Paul Pearson, general partner of Historic Inns, whose name has become synonymous with the inns over the years.

Marc J. Lipchin, the lawyer for Chequers, said he will speak with his clients soon to see if they want to appeal yesterday's decision. He also will ask his clients if they are interested in reaching an out-of-court agreement.

A hearing has been scheduled for Dec. 6 to review the inns' plan to pay off its creditors.

The inns filed for Chapter 11 bankruptcy in September 1990. First Federal of Annapolis held its loans then, but before negotiations to restructure the inns' mortgages could be completed, the bank went under.

The Resolution Trust Corp., a quasi-governmental company that takes over loans of banks that go under, sold control of the mortgages to Chequers.

The investment company, which holds the Historic Inns' first and fourth mortgages, filed to take over the inns shortly after acquiring the loans, Mr. Sher said.

Chequers is owed between $8 million and $10 million, lawyers said yesterday.

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