Despite bankruptcy, Iron Horse Hotel aims to retain local ownership, lawyer says
Citing the impact of COVID-19, The Iron Horse Hotel in Milwaukee’s Walker’s Point files for Chapter 11 bankruptcy protection while it restructures debt and tries to recover from the financial devastation of the pandemic.
owner of the iron horse Tim Dixon filed a voluntary petition Thursday in a U.S. bankruptcy court in the District of Delaware under the entity name Rider Hotel LLC. The filing indicates that the company has estimated liabilities ranging from $10 million to $50 million; debts include a $2 million EIDL pandemic relief loan from the US Small Business Administration as an unsecured creditor. The hotel, its restaurants and its event activities remain open for business.
Dixon opened the 102-room boutique hotel in 2008 after redeveloping a six-story, nearly 96,000-square-foot former warehouse at 500 W. Florida St. Today, the Iron Horse is one of rare independent hotels in Milwaukee. , which means it is not owned or operated by a larger chain or flag.
One of the aims of the reorganization is to maintain local ownership of the business, said Kurt CarlsonChicago-based corporate attorney and lead counsel in the Iron Horse bankruptcy case.
“(Tim) is committed to ensuring that this hotel continues to grow and prosper for years to come. … He’s committed to owning the hotel, to maintaining its independence,” Carlson said in an interview with BizTimes Milwaukee.
The service and hospitality industry has been among the hardest hit by the pandemic and ensuing government mandates, and small businesses or independent businesses have particularly faced the challenge without the same level of cash reserves. and resources than large companies or chains.
The bankruptcy filing provides “breathing room” for the Iron Horse, Carlson said, to focus on returning revenue to pre-pandemic levels without additional pressure from lenders.
“We are trying to position ourselves stronger in the market and really restructure our debt in order to come out of this post-COVID era stronger and better for it, and to have more agreeable terms with our secured creditor,” he said. -he declares.
At least eight months of unsuccessful negotiations with one of its secured creditors finally caused Iron Horse to file for bankruptcy. Unable to make its loan payments during the pandemic, the company offered several workarounds and alternatives to fulfill its obligation to repay the lender in full over the life of the loan, Carlson said. But none of the proposed resolutions pleased the secured creditor, who Carlson asked not to be named in this story.
“This lender just wasn’t situated and set up to deal with this. They were sort of taking the old answers, the old ways and the old thought processes and applying them to a post-COVID era,” he said. “The secured creditor did not agree to any of our proposals…so ultimately, we were forced to file for Chapter 11 bankruptcy.”
The bankruptcy case will continue with “day one moves,” which ensure the hotel can use its cash and bank accounts, retain professionals, and do what it needs to do to successfully reorganize. Those hearings and motions should take place within a week or two, Carlson said.