Diversified Trustee May Be Named : C. Hugh Friedman Is Expected to Take Over Radisson Hotel
Attorney C. Hugh Friedman is expected this morning to be appointed trustee to oversee the bankruptcy case of San Diego Diversified Properties, developers of the Radisson Hotel in Mission Valley, according to sources close to the case.
An order appointing Friedman will be signed by U.S. Bankruptcy Judge James M. Meyers this morning, sources said. The veteran San Diego lawyer will assume control of the controversial 264-room Radisson from the court-appointed receiver that has operated the facility since June.
To Give Up Control
William Smelko, a bankruptcy attorney for Carroll Davis, San Diego Diversified’s president, confirmed that a trustee is expected to be named but declined to name the person.
Royal Continental Cos., the receiver, will “turn over all operations to the new trustee Friday morning,” said Smelko.
David Osias, attorney for Royal Continental, confirmed that his client will relinquish control of the 13-story Radisson to the trustee this morning.
Davis’ company filed on Aug. 8 to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
That was one week before a scheduled foreclosure sale of the hotel and one day before a City of San Diego deadline for permits to be filed on new developments in Mission Valley.
Davis has announced plans to build a twin 13-story hotel tower and a parking garage next to the existing facility, and his Chapter 11 filing might exempt him from the filing deadline, the sources said.
The appointment of a trustee means that “the process of reorganization is beginning full steam ahead,” said Smelko.
He added that the hotel’s operating expenses would be trimmed significantly with a trustee taking the receiver’s place.
Defaulted on Loans
By law, a bankruptcy trustee can receive a maximum of 1% of the funds he administers, which in this case will be the hotel’s gross revenues.
Royal Continental Cos. received, in contrast, 3.5% of the hotel’s gross revenues and 10% of its gross operating profits.
Davis’ company defaulted on $27.5 million in construction loans last December and has been trying unsuccessfully to work out a refinancing agreement with federal regulators.
Regulators forced Davis’ company into receivership on June 21.
