Tahitian Inn, a landmark South Tampa hotel popular among locals, politicians and tourists alike, has filed for Chapter 11 bankruptcy reorganization.
The hotel owners vowed to stay open during the reorganization, with their 70-plus employees keeping their jobs.
"The Tahitian Inn has been one of the most successful hotels in Tampa Bay since it was founded in 1952 by my father and uncle," Joe Pupello, the inn's president and owner, said in a statement. "This bankruptcy was made necessary because of a dispute with our lender. We expect to get this resolved, move forward and maintain our position as one of our community's most successful hotels."
Pupello said his hotel, along with most others, suffered during 2009 and 2010. "The worst two years for the industry since the Great Depression," he called them. But he said the boutique hotel emerged in 2011 "with a percentage increase in revenues that led the entire local hotel industry."
Scott Underwood, an attorney with Fowler White Boggs representing Tahitian, said the mortgage dispute centered on funding for a six-figure capital improvement to the hotel's cafe and restaurant.
An employee told hotel owners that he was providing information to the servicer about the use of capital funds when he apparently had not. That failure led to an unexpected default.
Compounding the problem, Underwood said, was that the loan had been transferred between different entities and servicers a half-dozen times, a loan transfer trail covering nearly three pages.
"Loans are transferred all the time," he said. "That said, this loan has a lengthy history and that does hurt … communication."
Underwood said the lender's servicer, LNR Partners LLC., was pursuing litigation against the hotel and was unresponsive to proposed resolutions. An LNR representative could not be reached late Wednesday afternoon.
Tahitian has assets of about $10 million, and its primary secured debt is its $4.6 million first mortgage. In its filing, Tahitian did not list any single unsecured creditor owed more than $12,000, but Underwood said the largest unsecured expense will likely be employee wage claims.
"We'll be filing a motion for employees, so they don't go without any pay," he said.
Jeff Harrington can be reached at (727) 893-8242 or email@example.com.