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Ownership of Skid Row Hotels Headed to Bankruptcy Judge

By Eric Richardson
Published: Monday, November 14, 2011, at 03:04PM
Baltimore Hotel 2010 Eric Richardson

The Baltimore Hotel, built in 1910, is one of three Skid Row hotels in the midst of the Yacoobian bankruptcy fight.

The fate of three Skid Row residential hotels will go in front of a bankruptcy judge on Tuesday as the creditor owed $9.8 million for the structures seeks permission to foreclose on them.

The King Edward Hotel, the Leland Hotel and the Baltimore Hotel are owned by Yacoobian Enterprises, LP, which declared chapter 11 bankruptcy in August of last year.

The trustee representing the debtor's estate has been working to sell the three properties, all built between 1904 and 1910, and filed a brief with the court last week to say that it had a preferred "stalking horse bid" lined up.

While the report did not list an offered price, creditor Canico Capital Group believes that it would be for roughly $7.5 million, less than the amount it is owed. It will argue on Tuesday that it should be allowed to foreclose on the property before a sale could go through.

The three hotels have a combined 415 units, according to a sales offering by Madison Partners, the firm hired by the trustee to market the properties. They are in need of serious renovation, according to Canico, which says in its filing that it found roughly $3 million in deferred maintenance.

As with most bankruptcy cases, this one is far from simple. Trustee David K. Gottlieb is arguing in a related case that at least part of the debt owned by Canico is invalid, and that after the government seized Security Pacific National Bank, the original lender, the firm purchased the note "from the FDIC by a circuitous route, possibly to avoid disclosures that might have prevented Canico from acquiring the loan pool."

Of the three hotels, the King Edward is best known for the King Eddy saloon, which claims to have first opened as a speakeasy during Prohibition.

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