The Waterfront Hilton, a resort hotel that has been the centerpiece of Huntington Beach’s seaside redevelopment, has emerged from bankruptcy reorganization proceedings, hotel officials said Wednesday.
U.S. Bankruptcy Judge James N. Barr approved the Waterfront Hilton’s reorganization plan Tuesday after the resort’s owners reached agreement with its prime lender, its builder and about 300 other creditors.
Under the agreement, the hotel will pay $16.5 million to prime lender Dai-Ichi Kangyo Bank to settle $60 million remaining on a loan. The hotel’s other secured and unsecured creditors will be paid about 67% of the more than $2 million they were owed.
The hotel also agreed to pay $950,000 to its builder, J.A. Jones Construction Co. of Charlotte, N.C., resolving a legal dispute in which each side claimed the other owed them money.
Waterfront Hilton co-owner Steve Bone said the bankruptcy plan was the best possible for all parties.
“We feel terrific,” he said. “We are pleased all of our secured and unsecured creditors can see this is the best way to maximize their return.”
The Waterfront Hilton rises 12 stories over what had become a picturesque, though rumpled, downtown Huntington Beach. With its marble corridors and commanding ocean views, the hotel was billed as an attempt to bring the regal air of neighboring Newport Beach to rustic, laid-back Huntington Beach.
But the recession took hold just as the hotel opened in 1990, and hotels were forced to dramatically cut rates in order to keep their rooms filled.
Bone said the lower room rates were a key factor in forcing the 290-room Waterfront Hilton into bankruptcy reorganization. But he said the hotel has succeeded in keeping the rooms filled. Occupancy is running a healthy 77% so far this year, up 6% from the same period last year, he said.
The reorganization effort took two years because of the case’s complexity, said Waterfront Hilton lawyer Gregg D. Lundberg.
“The dispute with the contractor was very protracted,” he said. “The issues with the bank were very complicated and, in part, were governed by some rules we’re not used to dealing with [since] the bank is governed by the Ministry of Finance in Japan.”
Bone said that the hotel was able to maintain its resort standards despite the bankruptcy, including its ratings, and recently completed a $2-million renovation.
Now, he said, the owners are going to concentrate on further development of the 50-acre parcel surrounding the hotel. Plans call for development of a time-share resort and 550 homes.