Bankrupt Trenton Hotel Sells for $6M
When the Lafayette Yard Hotel opened in 2002, developers hoped the towering hotel would inject activity, commerce, and cash into downtown Trenton, New Jersey. Following an embattled decade of financial struggle, those dreams have finally crashed in a $6 million bankruptcy case. Perhaps new management can succeed where previous owners failed. For now, at least, the wheezing hotel’s new ownership is optimistic about their prospects.
Struggling Trenton Hotel $30M in Debt
With its 197 rooms (and parking garage to match), Trenton’s Lafayette Yard Hotel cost $60 million to build just over ten years ago in 2002. Trenton, which suffers from a reputation for crime and decay that is nearly on par with that of beleaguered Camden, had hoped that a soaring new hotel would invite a flurry of activity — and of course, the money that comes with it. Instead, the poorly-timed new construction struggled to stay afloat over a difficult decade of low profits and high operating costs in the midst of a suffocating economic recession.
Now, in 2013, the hotel’s struggles have finally come to a head.
The Lafayette Yard Hotel ultimately filed for Chapter 11 bankruptcy in August of this year, after financial personnel determined the establishment was drowning in a deep ocean of debt: $30 million deep, to be precise. (A month prior, Marriott had pulled out as the hotel’s operator, and management was unable to find a replacement willing to take on so many zeroes in the red.) Nearly half of that $30 million debt is to the city of Trenton itself, with another $9 million representing loans from the state of New Jersey, and just over $7 million owed to the Trenton Parking Authority.
New Ownership Brings New Hope
Two bidders fought a brief war over the languishing hotel. In one corner, New York-based media company Edison Broadcasting; in the other corner, Camden County-based VBCE, which owns hotels and Dunkin Donuts establishments throughout Pennsylvania, Maryland, and Virginia. While VBCE — local, experienced with hotel management — may have seemed a more likely winner than an out-of-state broadcasting company with no hotel experience, VBCE bowed out of the race once the bidding, which began around $5 million, eventually climbed to the $6 million mark.
Now, the Lafayette Yard Hotel belongs to Edison Broadcasting. But what do they plan to do with it?
Edison is optimistic. The company’s Executive Vice President, Deepak Viswanath, says that if things go well, Edison Broadcasting may even move to New Jersey to keep a closer eye on its latest acquisition.
For now, contracts stipulate that the hotel must remain a hotel, even if Marriott is long gone. However, that hasn’t done much to stifle whispers that what was once Lafayette Yard Hotel may become an assisted living center, rehab center, or educational facility. Councilwoman Marge Caldwell Wilson sincerely hopes the rumors are just that: rumors. “I want them to keep this a hotel. I don’t want another rehab center in my district, don’t want an education center because it’s tax exempt. While I love education, why convert something that has the potential to be a revenue maker?” Making revenue was, after all, the primary intended purpose of the original hotel when it first opened its doors in 2002 — and making revenue is always a priority for Trenton.
If you are considering filing, contact the law offices of Young, Marr & Associates online, or call (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania to schedule your free consultation with an experienced bankruptcy lawyer.
☑ Been paying credit card balances that seem to never go down?
☑ Lost your job and are now having trouble keeping up?
☑ Attempted to work out a payment arrangement to no avail?
☑ Been notified of a mortgage foreclosure action?
☑ Been denied for a mortgage or other line of credit?
If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.