Firms behind Queen Mary management and hotels in Pasadena, Anaheim and Palm Desert file for bankruptcy – Daily News

on Jan21
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More than two dozen companies associated with Urban Commons, the real estate firm that has been tasked with managing the Queen Mary and owns hotels across Southern California — including in Pasadena, Anaheim and Palm Desert — have filed for Chapter 11 bankruptcy.

The voluntary petitions for bankruptcy, which were filed this week in the Delaware district of the U.S. Bankruptcy Court, impact 27 subsidiaries and affiliates of Eagle Hospitality Trust, which oversees 18 U.S. properties through Urban Commons and other corporations.

The corporations that were listed in the bankruptcy filings included:

  • Urban Commons Queensway, LLC, which oversees the Queen Mary;
  • Urban Commons Cordova A, LLC, which oversees the Sheraton Pasadena Hotel;
  • Urban Commons Anaheim HI, LLC, which oversees the Holiday Inn Hotel & Suites Anaheim;
  • UCF 1, LLC, which oversees the Embassy Suites by Hilton Anaheim North; and
  • Urban Commons Highway 111 A, LLC, which oversees the Embassy Suites by Hilton Palm Desert.

Urban Commons, in a Wednesday evening statement, did not directly address the bankruptcy filings, but did say the coronavirus pandemic has led to “unexpected and unprecedented challenges” for the company. The statement also said its various lease agreements allow rent forgiveness during pandemics.

“We have done everything in our power to unite during these uncertain times,” the statement said, “and work together amicably to facilitate the best chance to survival and success.

By filing for Chapter 11 bankruptcy, the corporations have signaled their intent to reorganize their structures to keep the businesses afloat and pay creditors over time.

The filings, on Monday, Jan. 18, came months after Pasadena first sued Urban Commons and several of its associated businesses for failing to pay $840,000 in taxes and fees owed by the Sheraton Pasadena, which Urban Commons owns.

One of Urban Commons’ associated companies, EHT SPH LLC, settled with the city in September, agreeing to pay $209,561 every month from October 2020 to January this year, with an additional payment in February for any interest or penalties that accrued over the plan’s period.

But that’s the last Pasadena city officials heard from the company.

Neither Urban Commons nor any of its associates or subsidiaries has made any of the promised payments to the city, and they’re already behind $630,000, according to a December lawsuit from Pasadena.

The city called on the courts to force Urban Commons, or any of its associates, to cough up the $840,000 it agreed to pay the city to end the dispute. Since then, the amount of money owed, according to Chief Assistant City Attorney Javan Rad, has grown to roughly $1 million.

The firm that Pasadena settled with was not among the entities that filed for bankruptcy this week, and Rad said Wednesday that the city will continue its legal efforts.

“We will continue to pursue our litigation,” he said in a statement, “in our efforts to collect the approximately one million dollars in wrongfully withheld taxes.”

The real estate firm has faced similar, though less extreme, troubles in Long Beach. In late 2019, city officials issued a notice to the company that it was in danger of defaulting on its Queen Mary lease because of its failure to complete urgent repair work. Around the same time, Long Beach’s third-party inspector for the Queen Mary began speaking publicly about the lack of maintenance and repairs that he saw on the ship.

But early last year, the city ended its longstanding contract with the inspector.

Long Beach officials, though, have repeatedly stood by Urban Commons in the face of criticism.

“I can say without any reservations that the ship is far safer than it was three years ago, or the day before Urban Commons took over the contract,” Long Beach Economic Development Director John Keisler said in a 2019 interview, shortly after he advised the firm that it could default on its lease.

But in December 2019, City Auditor Laura Doud announced that she would begin an audit of the city’s Queen Mary lease agreement with Urban Commons. Doud has not yet released the results of that audit.

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