The controversial Radisson Hotel will remain open for business and its operations will not be disrupted, even after it is taken over by federal regulators sometime in the next 60 days, hotel and regulatory officials insisted Wednesday.
"Our intention is to continue operation of the hotel," said Jack Rubin, executive vice president of the Palmieri Co., the Los Angeles-based firm that is acting on behalf of the Federal Savings & Loan Insurance Corp. (FSLIC).
FSLIC is owed more than $30 million in defaulted construction loans made to the Radisson by failed San Marino Savings & Loan Assn., which was taken over by regulators in 1984.
U.S. Bankruptcy Judge James Meyers on Monday approved FSLIC's request to foreclose on the Radisson, the main asset of developer Carroll Davis' San Diego Diversified Properties. The firm, facing certain foreclosure by FSLIC last summer, has been in Chapter 11 reorganization bankruptcy since August.
Rubin met Wednesday afternoon with Radisson trustee C. Hugh Friedman to discuss the "orderly transition" of hotel operations to FSLIC.
Regulators likely will assume control of the posh 13-story, 264-room Mission Valley hotel before the middle of May, Rubin said.
After that, FSLIC will attempt to market the property on a "best-price" basis, he added.
In Monday's bankruptcy court hearing, Meyers estimated the value of the hotel at between $22.6 million and $26 million--below the $30 million Friedman had been asking for.
'Not Much Chance'
With FSLIC owed at least $30 million in past-due loan principal and interest, there is now "not much chance Radisson creditors will be paid," one hotel source said.
Meanwhile, it remains uncertain if Davis will appeal Meyers' decision.
"We haven't yet determined what our position is," Davis said Wednesday. His firm could offer to settle the debt with FSLIC--but that would take securing the necessary financing--or he could "seek remedies in the appellate courts."