A local bank has taken its dispute over a Short Pump hotel to federal court. Midlothian-based Community Bankers Bank has sued Ravi Patel and Chandra Patel, two North Carolina hotel developers who the lawsuit claims personally guaranteed a $19 million loan on the Aloft Hotel at West Broad Village.
The hotel’s owner, Short Pump Hotel Partners LLC, stopped making payments on the loan in October and is in default despite negotiations late last year and more recent demands by the bank. Still waiting for its money, the bank is now going after the two guarantors for at least part of what is owed.
This is the second lawsuit spawned by the hotel’s unpaid loan, which was originally borrowed in 2008.
Community Bankers Bank filed suit in May in Henrico Circuit Court, asking a judge to appoint a receiver to operate the three-year-old hotel in light of the default and the property being underwater. If approved, the receiver would take the reins of the property while the bank considers its options, which includes foreclosure.
Chandra Patel and Ravi Patel founded and run Charlotte-based SREE Hotels, a company that develops and manages hotels across the Southeast, mostly in North Carolina and South Carolina.
They each have a 12.5 interest in the LLC and each agreed to guarantee 15.62 percent of the original loan amount, the banks claims in its federal suit. That amounts to a combined $6 million in damages that the bank is demanding. The bank claims it requested payment from the two guarantors in May to no avail.
Messages left Friday for Chandra Patel and Ravi Patel at SREE’s offices were not returned by press time.
Community Bankers Bank is represented by Robert Chappell, an attorney with Spotts Fain. Chappell declined to comment on the case.
The bank’s case against Short Pump Hotel Partners LLC is pending in Henrico Circuit Court, with the next hearing set for Friday. Also named as a defendant in the initial suit is LTD Management, a Chesapeake-based hotel developer and manager known now as LTD Hospitality.
The LLC has argued in that case that it wants to continue to operate the property and that an emergency receiver could cause permanent harm to the value of the hotel.
Community Bankers Bank made the $19.25 million loan in 2008 in conjunction with other unnamed banks. It is what’s known as a correspondent bank, which helps facilitate large commercial participation loans.
The Aloft Hotel, at one of the western ends of the West Broad Village mixed-use development, is open for business and bringing in money. In its argument against the need for an emergency receiver, LTD said that the Aloft property is generating revenue that exceeds its expenses, but not including debt service.
LTD is represented in the local civil case by Allan Heyward Jr. of Cook, Heyward, Lee, Hopper and Feehan. Heyward declined to comment.
Community Bankers Bank says in its suit that it is concerned that revenue from Aloft might have been diverted to pay obligations on LTD’s other hotels.
The bank has subpoenaed financial records from 15 LLCs that own other hotels managed by LTD seeking evidence of financial transfers among them and the Aloft entity.
The LLCs called the subpoenas a fishing expedition issued for the “apparent purpose of annoying and oppressing” the recipients, according to court records.
The 15 LLCs are represented by Blackwell Shelley Jr., an attorney with the Richmond law firm of Shelley and Schulte. Shelley declined to comment.