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Archive for Saturday, August 7, 2004

General manager denies overpayment allegations

August 7, 2004

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The general manager of the Eldridge Hotel denied allegations made this week that he contributed to the hotel's bankruptcy by "grossly" overpaying himself.

Rob Phillips, also majority owner of the downtown landmark, on Friday refuted a court filing Wednesday that said from 1998 to 2003 he withdrew $2.4 million from the business to pay himself and other unidentified "insiders." During the same period, the struggling hotel posted losses of $1.23 million.

"Believe me, I'm trying to find those cans of cash that I buried," Phillips said. "When I read that, I got my shovel out and said I need to look for those cans."

He declined to say how much money he had paid himself during the period.

The filing was made in U.S. Bankruptcy Court in Kansas City, Kan., by an attorney representing investors Mitchell Chaney and Bobby Douglass, who made a $2.5 million offer to buy the hotel. The offer was rejected last week by Phillips.

Chaney said Friday the numbers in the filing were accurate, but referred questions to his attorney, Todd Ruskamp. Ruskamp did not return calls, but previously said the information was gleaned from documents provided by Phillips as part of the group's due diligence of the hotel operations.

The filing labeled the withdrawals by Phillips as "textbook examples of the bad faith use of Chapter 11." It also alleged the hotel's bankruptcy could have been avoided.

"The Debtor's pre-petition operating losses are a direct result of the large withdrawals from the Debtor by or for the benefit of Rob Phillips," Ruskamp wrote.

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