After nearly a year in court, Bret Wirta, owner of the Holiday Inn Express & Suites, 1441 E. Washington St., has a court-approved plan to reorganize his hotel under chapter 11 bankruptcy and maintain ownership.
“I’m relieved justice was served and our plan was confirmed,” he said in an interview last week at the hotel.
“We are still disappointed,” Wirta said. “After the last recession, we all bailed banks out, and during this pandemic they tried to take advantage and seize control of this hotel from under me.
“It was legal but doesn’t mean it was right. We’re doing the best we can during the pandemic and I’m glad to have this cloud lifted from over us.”
A plan was confirmed by Judge Marc Barreca on July 14 in the U.S. Bankruptcy Court Western District of Washington between Wirta’s company Wirta Hotels 3, LLC and his loaning bank Wilmington Trust, who serves as trustee for Citigroup Commercial Mortgage Trust.
Wirta and his wife Trisha, who have co-owned and operated the hotel since April 2010, learned that bank representatives placed a notice on the hotel’s doors in August 2020, stating there was going to be a receiver, a new operator, put in place for the company because of late payments.
The Wirtas sought chapter 11 bankruptcy to maintain ownership and ask to delay payments because of the impact of COVID-19 on the hotel industry, Bret Wirta said.
He said from March 2020 through the summer of 2020, he was negotiating delayed payments with the bank but later discovered they were preparing to put a receiver in.
Wilmington Trust has through Thursday, July 29, to appeal the court’s decision, Wirta said, and if not appealed they’ll have a hearing to decide the total in fees and penalties owed.
According to court documents, Wirta could owe Holiday Inn’s lending bank, Wilmington Trust, National Association, about $575,000 in claims, including fees for his bank’s legal expenses. His monthly payments prior to the pandemic were about $46,880 in principal and interest, he said, and that the two parties agreed his total loan is about $8.5 million.
A prepayment premium of about $2.4 million was filed by Wilmington Trust’s attorneys because the Wirtas were perceived as late with payments but the amount was denied by the judge, according to court documents
Wirta said the agreed-upon plan was one he crafted with help from his lawyers with Foster Garvey and a financial advisor with Premier Capital suggested back in September 2020, when hearings began.
He said Wilmington Trust did everything it could to get more fees despite Wirta agreeing to their “astronomical fees and penalties.”
“They actively tried to prevent the judge from confirming our plan,” he said. “Without the plan being confirmed there would have been no choice for the court but to appoint a receiver to run the hotel and then sell it out from under Trisha and me.
“Their goal never changed from the day that they began this attempted takeover of our hotel. To me, the greed of these bankers is breathtaking.”
Officials with Wilmington Trust said they do not typically comment on cases as a trustee.
According to court documents, the Wirtas were granted relief to pay employees and utilities early in the bankruptcy process.
The judge authorized Wirta to “assume and continue performance under the Franchise Agreement in substantially the same manner as before the Chapter 11 Cases,” court documents state.
Starting in August, he must begin paying the bank’s unsecured loan amount back, according to court documents, and if the Wirtas are late with a payment they must provide written notice to the bank and have 30 days to respond and pay off the defaulted amount.
The bank’s attorneys estimate in court documents the Holiday Inn Express will be valued at $15.2 million by early 2024 as the economy stabilizes.
“I feel grateful for the support we received from the community,” Wirta said. “Especially the staff with double dark days with the pandemic and bankruptcy case. They were incredible.”
Wirta’s other businesses, the Black Bear Diner, 1471 E. Washington St., and Quality Inn & Suites at Olympic National Park, 134 River Road, were impacted by the pandemic, he said, but his other banks were more understanding of the global situation.
“The banks have been working with us with no outrageous fees,” he said. “Most property owners I know, their banks worked with them.”
Today, the Holiday Inn Express employs 29 full- and part-time staff with most of those retained during the pandemic, Wirta said.
Like most employers, Wirta is seeking more staff despite raising hourly wage increases and offering signing and longevity bonuses; he previously employed 49 people at the business’ hiring peak in 2019.
A silver lining during the pandemic, he said, has been seeing a surge in visitors to the Olympic Peninsula, particularly first-timers.
His Tesla charging station may play a part in that as in his last report, Wirta said; about 90 percent of vehicles came from off the peninsula to charge there, he said.
“I can’t say if they ate a hamburger or stayed at the hotel specifically, but there’s a good chance they planned a trip to come here because of this,” Wirta said.
In 2022, he’s planning an approximate $1.5 million-$2 million remodel resurfacing and putting in new furniture in the hotel. Under the franchise agreement, he’s required to remodel certain elements every 10 years, but Wirta said he wants to do a few more things than what’s required.
“The goal is to be the nicest hotel on the peninsula,” he said.
For more information about the hotel, call 360-681-8756 or visit ihg.com.