Responsibility for maintaining Doral Arrowwood in limbo
Anderson Hill Road Capital LLC may not replace U.S. Bank, for now, as the plaintiff in a mortgage foreclosure action against the Doral Arrowwood resort.
Anderson Capital claims it has acquired U.S. Bank”™s original $75 million mortgage on the property, but Westchester Supreme Court Justice Gretchen Walsh denied the company”™s motion to take over the bank”™s foreclosure case.
“There is insufficient evidence to establish that Anderson Capital is the current holder or assignee of the note,” Walsh ruled on Jan. 16.
Doral Arrowwood Conference Center and Hotel closed on Jan. 12.
Walsh scheduled a hearing for Feb. 11, to determine who shall be responsible for the costs of “operating and preserving the property.”
“I will not allow this property to be abandoned,” Walsh told lawyers who had gathered in her courtroom on Jan. 7 to discuss how to wind down the affairs of the Rye Brook resort.
There were two issues before the court then: a motion by court-appointed receiver Kirby D. Payne”™s attorney to relieve him of his duties, and a request by Anderson Capital to take U.S. Bank”™s place as the mortgage holder and plaintiff in a foreclosure action.
As to discharging Payne, “not happening today,” Walsh said. She said she needs an accounting of the funds and a plan to pay creditors and secure the property.
Payne said at the Jan. 7 hearing that Doral Arrowwood has about $1.5 million in cash, $1.4 million in projected collections, and expenses of $6.6 million.
As to Anderson Capital, Walsh told its attorney, Thomas Decea, she needs more proof that the company actually owns the mortgage.
Decea said that his client should not be required to keep up the property. Actually, Walsh said, they do.
“Your client went into this with their eyes wide open,” she said. “If they didn”™t want to take responsibility ”¦ they shouldn”™t have purchased the note.”
Walsh adjourned the hearing for two days and urged all parties to work on a plan for the property.
The impending closing was disclosed last month in court documents.
“Due to the lack of funding,” Payne stated in a Dec. 24 affidavit, the property “is in dire financial condition. ”¦ Jan. 12 is the date the last major profitable group checks out of the hotel before a period of slow business where additional losses and obligations are incurred.
“Based on the present financial condition ”¦ and in my professional judgment, the hotel operation must cease no later than Jan. 12.”
Benchmark Hospitality of Westchester, the Woodlands, Texas company that manages the resort, filed a Department of Labor notice stating that 275 employees will lose their jobs.
U.S. Bank of Minneapolis filed the foreclosure in March, demanding $58.6 million. Payne was appointed at an emergency hearing the following day, and he immediately began fixing deferred maintenance problems to protect the value of the 114-acre, 393-room property.
He told the Westchester County Business Journal that business would continue as normal and no one would notice any differences.
But Doral Arrowwood continued to run deficits, according to an affidavit by Payne”™s attorney, James J. Veneruso.
Several times, Payne asked for, and received, more funds from the lender to keep the property operating.
By Dec. 11, Veneruso stated, Payne needed nearly $1 million to operate the resort and meet its expenses. Payne asked for more funds, but on Dec. 19, according to Payne”™s affidavit, the lender advised him that, “effective immediately, it would not provide the requested funding.”
Payne had also forwarded his funding request to DCCA LLC, the family company that owns the resort, but he received no response.
“I cannot now properly, effectively and full carry on my duties,” Payne stated, “and therefore it is imperative that I be immediately discharged as temporary receiver.”
When Doral Arrowwood opened in 1983, it was a conference center for Citibank. In 1986, the Kaskel, Blum and Schragis families bought the property, expanded the hotel and developed its reputation as a premier conference and recreation resort.
The families managed Doral Arrowwood until 2015, when they hired Benchmark to run it. A year ago, DCCA sued Benchmark, claiming it had mismanaged the resort. U.S. Bank was alerted to the lawsuit and filed the foreclosure action.
Payne had proposed a plan for an “orderly closing of business operations” by Jan. 12. A skeleton staff would continue working for a month to notify groups, guests, vendors and to close the books.
“On the date of closing hotel operations,” he stated, “there will be sufficient funds to pay the hotel”™s employees their current pay and some other obligations of the hotel. However, there will be insufficient funds to pay other obligations or to properly shut down systems and physically secure the mortgaged property.”