Reid Park files bankruptcy, plan after debt settlement attempt fails

By Caroline Salls

Pittsburgh, May 27 - Reid Park Properties LLC filed for Chapter 11 bankruptcy May 26 in the U.S. Bankruptcy Court for the District of Arizona and filed a plan of reorganization and related disclosure statement.

According to the disclosure statement, the company has suffered a large decline in demand for rooms and services at its Doubletree Hotel in Tucson, causing a decline in revenues that has reduced the cash required to operate its business and meet its obligations.

Reid Park said it tried to reduce and compromise its debt obligations with its secured creditors before the bankruptcy filing, but those settlement attempts were rejected.

The company said the plan will be funded by its ongoing business operations and possible capital contributions, if required.

Specifically, Reid Park said it expects a $600,000 capital contribution to be made to fund the plan and make capital improvements to its hotel property.

Creditor treatment

Treatment of creditors will include:

• Holders of administrative claims and administrative convenience claims will be paid in full in cash;

• Holders of employee priority claims will be paid for vacation days, holidays and sick days;

• Holders of governmental unit claims and Pima County ad valorem real property tax claims will retain their liens and be paid over a five-year period with interest;

• Unless a treatment stipulation is reached, the Wachovia/Wells Fargo secured claim will be paid via a promissory note and deed of trust. The claim will accrue interest at 5%, and the note will be paid in equal monthly installments over 20 years, with the first 36 payments being interest only.

The final payment must be made from either the proceeds from the sale or refinancing of the property securing the claim or contributions of the owner of the property at the time the payment is due;

• The Wachovia/Wells Fargo second-lien claim will be treated as an unsecured claim;

• Lloyd Construction's secured claim will be paid over 12 years in equal $100,000 installments;

• Holders of unsecured deficiency claims and unsecured claims will receive cash equal to 5% of any profits of the business for a five-year period; and

• Equity holders can retain their current percentage of interest by making capital contributions. Participating investors may contribute substantial capital required to fund the plan and/or make capital improvements to Reid Park's property.

In connection with the bankruptcy filing, Reid Park has requested court approval to use the cash collateral of its secured creditor to fund its operations while in bankruptcy.

Debt details

According to court documents, Reid Park had $14.08 million in assets and $51.83 million in debt.

The company's largest unsecured creditors include:

• Wachovia/Wells Fargo, with a $26.35 million claim;

• Craycroft and Broadway Loan, LLC of Tucson, with a $9 million loan claim;

• Holliday Finoglio Fowler, LP of Houston, with a $5.5 million loan claim;

• Zachary Safrin of Paradise Valley, Ariz., with a $3 million interest guarantee claim;

• Transwest Partners, LLC of Tucson, with a $1.91 million loan claim; and

• Lloyd Construction of Tucson, with a $1.17 million claim.

Reid Park was formed in 2007 to hold title to the Tucson Doubletree Hotel. Its Chapter 11 case number is 11-15267.

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