Archive for Thursday, August 19, 2004

Court favors quick Eldridge auction

Judge wants Downtown Lawrence landmark used as hotel

August 19, 2004


— Some prime Lawrence real estate will be auctioned this fall, but only those interested in its continued use as a hotel will be allowed to bid.

In a hearing Wednesday, U.S. Bankruptcy Judge Robert Berger said an auction to sell the bankrupt Eldridge Hotel probably would be in late September.

But he put stipulations on the process. Berger said only bidders interested in using the historic building as a hotel would be allowed to participate. He said the 48-room hotel at 701 Mass. deserved protection from developers who might convert it for condominiums or other uses.

"It is a historical building on Massachusetts Street and I understand how important it is to the community," Berger said.

He rejected arguments made by attorneys on behalf of the hotel and general manager Rob Phillips, who wanted the auction to be conducted in late October or early November.

The later auction date was sought in order to give the group time to advertise the sale nationwide. Opposing attorneys argued there already were enough interested bidders to ensure a successful auction.

Phillips said later he was pleased, especially about Berger allowing only bidders who would use the building as a hotel.

Earlier, Phillips said he was opposed to the auction process and wanted more time to negotiate a deal with a buyer. Wednesday, he said he was content to sell the hotel at auction.

"It is time for someone else to take over and run with the Eldridge Hotel," Phillips said. "I'm pleased that soon someone with much greater resources will be able to do that."

Todd Ruskamp, an attorney representing a group of investors that includes former Kansas University football great Bobby Douglass, said he expected competition among the bidders would net enough to cover the approximately $2.1 million in debt the hotel owes creditors.

"The competitive juices here are already flowing," Ruskamp said.

In addition to the Douglass group, a group including Chicago residents Steve and Seth Traxler and Bob Werts, owner of downtown Lawrence's Waxman Candles, reconfirmed Wednesday its intentions to bid on the property.

Lawrence attorney Chris Masoner also told the court he is representing a group interested in purchasing the building to operate it as a hotel. Masoner declined to identify the group but told the court it included several Lawrence real estate investors and an experienced hotel operator.

Officials with Baldwin-based Mid-America Bank said the bank may bid on the property to protect its interests in a $1.2 million loan the hotel has defaulted on.

Thomas Mullinix, an attorney representing the Eldridge, said that within the next week he would set an exact date and time for the auction. He said it probably would take place the last half of September and be conducted at the bankruptcy court in Kansas City, Kan.

Other details of the auction will be finalized in the next week.

Berger directed Eldridge officials to advertise the auction locally and regionally. The judge said other bidders besides those who had already expressed an interest would be allowed to participate.

Berger also said he wanted a mechanism in place that would require bidders put down a "credible deposit" to bid on the property. No amount was set but discussions in court indicated a range from $25,000 to $100,000.

The winning bid at auction will require bankruptcy court approval to become final, Berger said.

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