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Foreclosure Imminent for Radisson Hotel

Court documents indicate the village plans to soon proceed with foreclosure, and the ownership group behind the development has pulled cash from hotel accounts.

It appears the writing on the wall was correct when it came to the Radisson Hotel's potential foreclosure.

In May, an email obtained by Patch indicated that village officials were discussing foreclosure on the hotel, which opened in May 2011. In the May 2 email, David Frank, an attorney representing the ownership group says:

"At this point all we know if (sic) that the Village intends to proceed with the foreclosure. We are awaiting its next move."

On Monday, Tom Daykin of JSOnline provided further confirmation that the village taxpayers may soon be the owner of the hotel. Daykin reports that court documents indicate the village intends to soon proceed with foreclosure on the hotel. An imminent foreclosure suit was mentioned at a recent hearing at the Waukesha County Circuit.

The village plans to proceed with the suit, and add other parties to the litigation.

Last week, attorney Randall Crocker, who’s representing the village in its ongoing receivership involving the Radisson Hotel, filed a temporary restraining order of hotel owner Jim Heyden, which prohibited him from stepping onto the hotel property.

According to court documents, red flag arose when it was revealed that owner Jim Heyden had drained checking accounts and payments were not being made. The ownership group, Lodging Investors of Menomonee Falls, has failed to make its first two semiannual $700,000 payments owed on the village loan.

According to the report, an unnamed Radisson official also emptied banking accounts for the hotel leaving no cash on hand for ongoing hotel operations. The ownership group also failed to make its franchise fee payment to use the Radisson brand, which they told village leaders they had.

A Troubled Past

In April 2010, the village that featured a $17.65 million loan to kickstart the hotel construction. The ownership group included Heyden, Gilbert, Dean Grosskopf, Paul Nooyen and William Krueger.

However, things quickly went south after the village approved the loan. In October 2010, Gilbert, who was a 10 percent owner of the hotel, filed for Chapter 7 bankruptcy. According to documents from the U.S. Western District Court, Gilbert’s assets were worth some $3.3 million but had outstanding liabilities of $106.4 million.

That was just months after Gilbert provided necessary documentation to ensure he had necessary net worth to account for his portion of the hotel’s worth.

Then, Grosskopf’s hotel management firm, Professional Hospitality, became in Dane County Circuit Court. According to the suit, Madison investor, Gregg Raup, is accusing Professional Hospitality of wrongfully diverting $1.2 million from hotels in Beloit and Green Bay to the Radisson Hotel in Menomonee Falls.

That spurred the village to take preemtive action and appoint a receiver to monitor day-to-day operations at the hotel and its revenues in November. At the time, Fitzgerald said officials were concerned but optimistic.

"The Village Board of Trustees is certainly concerned about recent events involving the Menomonee Falls Radisson Hotel and the outside litigation that is pending against current owners," Fitzgerald said in a statement at the time. "However, the Village Board of Trustees believes that the appointment of a receiver is a prudent measure to take to assure the community and its citizens that the hotel’s operations will be legally protected during this period of outside litigation."

As part of the developer agreement crafted by the village, the hotel’s ownership group was required to make scheduled payments on the principal of the loan. However, the group failed to make its first $700,000 payment when it came due in November. A total of $4.1 million in principal is due to be paid by the partners over the next four years. According to the development agreement, the loan will be paid in full by the time the calendar turns to 2026.

Unions_NO June 12, 2012 at 08:24 PM
On a related, fiscally-unbelievable note: all incoming freshman this fall at MFHS are to receive a free laptop (unless "stolen" - I mean sold - then the parents will owe $600) as part of a pilot program. I didn't know that the school district was so flush in cash.
Nuitari (Grand Master Editor) June 12, 2012 at 08:25 PM
That's it! Let's cover it with solar panels so all the residents can lower their energy bills.
W . Benz June 20, 2012 at 05:42 PM
Fitz "had NO power to do this on his own" , Do you know how Village Gov works ? Fitz is in charge and if anyone one doesn't think he should be held responsible is just is making excuses for him or is beholding to him. The Village board are all part time elected , Fitz is FULL TIME Manager that provides RECOMMENNDATIONS with the information to the Trustees. I question if the trustees even read the proposal of the aggrement . So tell us Ted who's in CHARGE !!!
Pj June 20, 2012 at 06:32 PM
It also makes our village board look like a bunch of lowlife thieves
Justin November 08, 2012 at 02:37 PM
I have expressed my interest in purchasing the asset with a plan that the Village could recoup their investment in the coming years. I am a hotelier and could easily turn this asset around just so tax payers are out of this mess. I've been told to hold off since legal proceedings are not completed yet. That being said, the only legitimate way this thing could be resolved is Village doing what it does best- which is not operating the business. If someone can assist us with expediting the process just so tax payers could atleast retain some part of the money and more importantly this saga could be ended, please reply to my post.

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