Crowne Plaza sheriff’s sale set for Dec. 22

Posted on Nov 17, 2009 by David DeWitte.

A sheriff’s sale of the Crowne Plaza Five Seasons in Cedar Rapids on Dec. 22 is expected to finally give the hotel’s largest secured creditor full legal possession.

A foreclosure action against Kronos Hotels LLC of Atlanta for possession of the Crowne Plaza has been dragging through Linn County District Court for more than a year.

CW Capital Asset Management LLC filed the foreclosure in October 2008 against Atlanta-based Kronos. By that time, Kronos already had plenty of mud on its face  for failing to pay employees and vendors not only at the Crowne Plaza, but more than a dozen other hotels it acquired from Lodgian Inc. at the same time.

CW Capital Asset management has since taken over daily control of the hotel from Kronos, and contracted with Prism Hotels & Resorts of Dallas to operate the property. General Manager Deb Stout told the Gazette last summer that the hotel management is looking forward to the sale as a chance to finally get the hotel into the hands of a buyer that will invest in it on a long-term basis, or at least leave the hotel under the stable management of Prism for a time.

CW Capital is considered the most likely candidate to buy the hotel at the sheriff’s sale, mainly to ensure that it isn’t snapped up for a fraction of the debt it is owed. It could sell the property in a more conventional real estate sale, or continue to own it for a while.

The hotel will be offered for sale in three tracts, according to a legal notice advertisement on page 9C of Tuesday’s Gazette. It says Kronos, through subsidiary Portfolio Cedar Rapids, owed a judgement of more than $58 milllion, plus court costs of $15,657.38, and interest of 12.9 percent from Oct. 10. That debt is believed to cover Kronos borrowings to acquire a number of other hotels beyond the Cedar Rapids property.

The document lists a long string of creditors, including the Iowa Department of Revenue , at least seven local supliers, and a former front office manager of the hotel.

It’s unclear exactly who will lose the most money in the deal. CW Capital Asset Management was only servicing mortgage securities for Wells Fargo Bank, trustee for the registered holders. The actual holders of the notes are not known.