Stage Set for Grand Hotel Bidding War
A bidding war looms for Anaheim’s financially troubled Grand Hotel after a Bankruptcy Court judge ruled Thursday that all three plans to revive the Disneyland neighbor may be viable.
Judge Alan Ahart in Los Angeles said he would approve one of the plans, including the high bid of $12.2 million from a Walt Disney Co. subsidiary, after a hearing in mid-April at the earliest. The date has not been set.
Disney would not comment on its intended use for the 242-room hotel. Under a $3-billion project that included a Westcot attraction, the hotel was earmarked as the site of a seven-story parking structure.
The project was scuttled last year as too costly, and Disney has since promised a scaled-down version. Chairman Michael Eisner has said recently that Disney will disclose its plans by next month for a new park next to Disneyland.
A Disney subsidiary, which acquired the mortgage on the Grand Hotel, was a day away from foreclosing on the building in early January when the judge granted the operators a 90-day reprieve to find a buyer.
Now, instead of picking up the 11-acre parcel in foreclosure for about $10.2 million--its investment plus interest--Disney has had to make a formal bid. And the bidding might not be over yet.
“Anybody seeing what is happening will expect that the offers will be increased. In essence, it will be a bidding war,” said Theodore W. Graham, a lawyer for two limited partners in Grand Hotel Associates, the Santa Monica limited partnership that owns the hotel and filed for bankruptcy protection.
The two partners, who have a 40% stake in the partnership, have found an investment group that is offering $12 million for the 30-year-old hotel.
Daren Brinkman, the partnership’s lawyer, said he hopes the plan that brings the most money to the bankrupt estate would be the one Ahart confirms. The judge, however, also has to make sure that certain legal criteria--such as fairness to creditors--are met, and the high bid might not take the hotel, Brinkman said.
The partnership has submitted its own plan to sell the business--not the hotel itself--for $12 million to Hasina LLC, a company led by hotel-motel owner Tushar Patel of Anaheim.
All three plans are expected to repay all creditors in full, but Brinkman and Graham worry that Disney would tear down the hotel, a block east of the Disneyland entrance on Harbor Boulevard, and go through with its earlier plans to build the parking ramp.
The partnership has alleged that Disney put the Grand Hotel’s business in jeopardy when it revealed plans in 1991 for its world-class resort next to Disneyland that included a Westcot center similar to its Epcot attraction at Disney World in Florida.
That project was halted in January 1995.