There are rumors stating that the Doubletree Hotel may be facing bankruptcy. According to the article found here, the hotel located at Reid Park in Tucson, Arizona may soon be foreclosed on. The hotel is behind on approximately $31 Million dollars of debt. Currently, the owners are attempting to negotiate with its creditors to avoid having to file bankruptcy and to prevent a foreclosure in July. However, if they are unable to negotiate with their creditors, the manager of the Doubletree Hotel will have no choice but to file bankruptcy in order to prevent a foreclosure.
This brings us to one of the most beneficial powers of a bankruptcy – the ability to stop a pending foreclosure. In the case outlined above, the threat of bankruptcy may actually be enough to prevent a foreclosure on the property by giving the Debtor, the Tucson Doubletree Hotel, a chance to breathe and make enough money to become current on its debts. The reason creditors are willing to give this time while contemplating a bankruptcy is because they know that once bankruptcy is filed, it is a long and difficult road to get the property out of bankruptcy. This is particularly true in the context of a Chapter 11 filing, as I am sure the owners are contemplating for the Tucson Doubletree Hotel right now.
However, in most cases, as is likely in the scenario with the Tucson, Arizona based Doubletree Hotel, bankruptcy will be necessary because the creditors are just not willing to halt the foreclosure process. If this is the case, bankruptcy can be filed at any time prior to the sale of the property. Once the bankruptcy is filed, the automatic stay goes into effect and prevents any collection actions against the property of the bankrupt estate. However, there is one large caveat here, if the notice of bankruptcy is not filed with the county recorder’s office prior to the foreclosure sale being commenced, and no parties of the foreclosure sale are aware of the bankruptcy, that sale may be valid and complete. That is why the bankruptcy must be filed and the notice of sale must be recorded prior to the actual trustee’s sale taking place.
Thank you for taking the time to read this article by Tempe based Bankruptcy Lawyer, Glenn Roethler partner at Greeves, Price & Roethler, PLC.