Fidelity Bank v. Key Hotels of Brewton, LLC et al
Filing
29
Order re: 13 MOTION to Appoint Receiver and Request for Expedited Hearing filed by Fidelity Bank will be held in abeyance until 6/17/15. Defendants are to file another status report by 6/17/2015. Signed by Chief Judge William H. Steele on 5/18/15. (mbp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
FIDELITY BANK,
)
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Plaintiff,
)
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v.
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KEY HOTELS OF BREWTON, LLC, et al., )
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Defendants.
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CIVIL ACTION 15-0031-WS-M
ORDER
This matter comes before the Court on Defendants’ Status Report (doc. 25) filed on May
11, 2015, as well as plaintiff’s Response (doc. 26) and defendants’ Reply (doc. 28) to same.
On April 13, 2015, the undersigned entered an Order (doc. 24) holding in abeyance
Fidelity Bank’s Renewed Motion for Appointment of Receiver pending a status report by
defendants to apprise the Court and opposing counsel of the progress of defendants’ ongoing
efforts to secure Hilton franchise approval and funding for the Brewton hotel property that is the
focal point of this litigation.
In their timely Status Report submitted last week, defendants, Key Hotels of Brewton,
LLC, and Anand Patel, furnished specific facts detailing the present status of the franchising and
loan applications. With regard to the potential Hilton franchise agreement, defendants document
various meetings and site visits involving Hilton executives, identify the general contractor that
Patel has selected as general contractor for the hotel project if and when Hilton agrees to flag the
Brewton property as a Hampton Inn, and generally expresses confidence that a Hilton approval
letter may be forthcoming “at any time.” On the financing side of the equation, defendants
indicate that Patel is pursuing a loan application with Trustmark Bank, that all requested
documents and information have been submitted, and that Trustmark is simply awaiting Hilton
approval of the franchise agreement before committing to the loan.
Plaintiff’s reaction to this Status Report is to propose that (a) the status quo remain in
place for another 30 days, subject to (b) defendants providing weekly written reports to plaintiff
and (c) defendants submitting “a commitment letter from a reliable funding source within thirty
(30) days with closing to occur not more than thirty (30) days after the obtaining of said
commitment.” (Doc. 26, at 1-2.) Defendants agree to (a) and (b), but not (c), given the
uncertainties of the timing of the Hilton franchise approval, which is a necessary prerequisite to
Trustmark moving forward with the loan.
Upon review of these materials, the Court is satisfied that defendant Patel is working
diligently and in good faith to procure the hotel franchise approval and financing that are needed
to resuscitate the Brewton hotel property and repay defendants’ debt to plaintiff, Fidelity Bank.
Moreover, all indications from the specific facts delineated in the Status Report are that
defendants’ plans are neither far-fetched nor speculative. The Court has no reason to believe that
defendants are acting for the purpose of delay, much less that they are simply forestalling the
inevitable failure of the project, appointment of a receiver, and sale of the asset, potentially at a
deep discount. Of course, it remains a possibility that those plans may not bear fruit. Hilton may
not approve the franchise agreement or Trustmark Bank may not approve the loan; however,
both of those approval processes appear to be on track. Also of substantial importance, Fidelity
Bank does not appear to be incurring incremental, additional harm at this time. Under the
circumstances, the Court concurs with the parties that the status quo should remain in place for
an additional 30 days, during which defendants should supply weekly written status reports to
Fidelity Bank.
That said, the Court declines Fidelity Bank’s request that a rigid 30-day deadline be
imposed for defendants to submit a “commitment letter from a reliable funding source.” Such an
artificial, arbitrary requirement overlooks the practical realities of the situation. By all
appearances, defendant Patel is doing everything he can to move the process forward, but certain
timing-related factors are out of his control; therefore, imposing a mandatory deadline for Patel
to obtain a written loan commitment appears unlikely to serve any constructive purpose, and
could result in these proceedings suddenly devolving into a receivership outcome even on the
cusp of a more favorable “win-win” result that could be achieved with just a little more patience.
To be sure, this is a fluid situation that bears close monitoring to ensure no abuses by defendants
and to safeguard plaintiff’s interests, and the Court has every intention of doing so. However,
setting a firm deadline for a loan commitment letter would not promote those objectives at this
time.
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For all of the foregoing reasons, it is ordered as follows:
1.
Plaintiff’s Renewed Motion for Appointment of Receiver (doc. 13) will be held
in abeyance for another 30 days, through and including June 17, 2015;
2.
Defendants are ordered to file another status report updating the contents of the
May 11 Status Report with a comparable level of detail and specificity (although,
as before, the names of particular Hilton or Trustmark Bank contacts may be
omitted) on or before June 17, 2015; and
3.
In the interim, defendants are ordered to submit (but not file with the Clerk of
Court) weekly written updates (in letter, facsimile or e-mail form) to Fidelity
Bank, beginning on May 22, 2015, with additional updates to be due on May 29,
2015; June 5, 2015; and June 12, 2015. Should Fidelity Bank believe that any
information in those writings warrants judicial involvement prior to the June 17
status report deadline, it may file an appropriate motion at any time after
conferring in good faith with defendants to attempt to resolve the issue
informally.
DONE and ORDERED this 18th day of May, 2015.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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