The Daily Californian Online

Claremont Hotel Files for Chapter 11 Protection

By Mary Susman
Daily Cal Senior Staff Writer
Friday, February 4, 2011
Category: News > City > Business

The Claremont Hotel Club & Spa has been a Berkeley landmark for the past 95 years. The resort filed for Chapter 11 bankruptcy protection Tuesday to undergo restructuring of debt.

The Claremont Hotel Club & Spa, located in the Berkeley Hills, filed for bankruptcy Tuesday to undergo a restructuring of debt, though the resort's daily operations will not be affected in the process.

The Claremont, which boasts a sweeping view of the San Francisco Bay, is one of five resorts across the country that filed for Chapter 11 protection - which is often referred to as "reorganization" bankruptcy - with the U.S. Bankruptcy Court. The five hotels collectively owed about $1.5 billion in mortgage debt by Tuesday, according to a press release from the Paulson Investment Company, one of the investment groups that jointly acquired the five resorts last week.

Tuesday's filing comes after Paulson Investment Company, Winthrop Realty Trust and Capital Trust Inc. seized the Claremont and seven other resorts from the financial firm Morgan Stanley through a foreclosure auction Jan. 28, according to the press release.

The firm originally purchased the properties for $6.6 billion in 2007, according to the San Francisco Chronicle. After the firm acquired the Claremont, the resort underwent "a major renovation," though since then it has not been able to maintain the property, said Adrian Larick, director of sales and marketing at the hotel.

While the hotel ownership has changed, the integral part of the historic resort remains untouched. The Pyramid Hotel Group, which has managed the hotel since 2007, will continue business as usual despite the bankruptcy and the new ownership.

"These kinds of things happen often in the hotel group where someone buys property," Larick said. "It's when the management changes that things change internally for the hotel. The management is staying the same, and that's a good thing for us."

As the corporate offices sort out debt, Todd Felsen, general manager for the hotel, said the resort's future is not in jeopardy. In fact, Larick said she hopes that by filing Chapter 11, the hotel will be able to access previously inaccessible funds.

"We will be able to loosen up funds for improvements in property that haven't been able to be done in the last three years," Larick said.

While the Claremont has faced financial difficulty due to the country's economic downturn, Larick said the situation is turning around, and the hotel, which she said has "touched" many Bay Area residents, will continue its legacy.

"Since October of last year, we've seen an uptick in everything - room reservations, people spending money on the spa," she said. "It's been here a long time."

During the debt restructuring process, Felsen said the hotel will continue serving the community the way it has throughout its 95 years.

"It's an iconic, legendary hotel," he said. "We continue our operation as normal."



Article Link: http://archive.dailycal.org/article/111785