TROUBLED GUAM HOTEL FACES BANKRUPTCY

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Guam Marriott Resort fights involuntary bankruptcy

By Connor Murphy HAGÅTÑA, Guam (Pacific Daily News, August 6, 2009) - District Court of Guam Chief Judge Frances Tydingco-Gatewood has refused to dismiss a case forcing the owner of the Guam Marriott Resort into involuntary bankruptcy.

In April, petitioners including National Union Insurance, South Korea-based VSST Co. and J&B Modern Tech filed to have UFB Guam Hotel Corp. placed involuntarily in Chapter 11 bankruptcy. Chapter 11 would allow the hotel to continue to operate with rehabilitation or reorganization.

The creditors stated in court papers, the Tumon hotel company owes them more than US$6.25 million.

In a response filed in May, UFB asked the judge to dismiss the case, saying it disputed the amount owed and the creditors have other avenues available to them, the hotel’s lawyers wrote.

At a hearing Friday, Tydingco-Gatewood denied a motion for immediate dismissal filed by the hotel.

"The court finds that immediate dismissal is not warranted at this time," the judge wrote. "However, this determination does not foreclose a contrary finding by this court after an evidentiary hearing."

A hearing has been scheduled for Sept. 4.

The company that owns the Outrigger Guam Resort and a few other Tumon hotels had been in talks to buy the Guam Marriott from UFB, but stopped in February due to factors including liens filed against the hotel, Michael Ysrael of Tanota Partners said yesterday.

Tanota and UFB also failed to agree on a management contract, Ysrael said. In addition to the Outrigger Guam, his company owns two OHANA-branded hotels on the island and is building the 28-story Bayview 5 hotel.

"When the liens were filed, that’s when we said we’re going to drop out and wait," Ysrael said. "We were close and then this complication arose."

Tanota would have paid between US$40 million and US$60 million, which included the purchase of the hotel, necessary renovations and its debts, Ysrael said.

In 2004, the now Guam Marriott, which was at the time the Pacific Star Hotel, was sold by the Republic of Nauru Guam Inc.

The Nauruan company lost the 19-story property in a foreclosure after it defaulted on two loans.

The Marriott International Capital Corp. was the lender of the two loans: one for US$4.7 million and another for US$16.5 million, foreclosure notices have indicated, according to Pacific Daily news files.

In 2006, the Guam Marriott Resort changed owners again - from Guam Acquisition Company to UFB, according to a notice of intended bulk sale.

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