Mo­tion seeks OK to sell con­ven­tion cen­ter For $6.5M

Texarkana Gazette - - FRONT PAGE - By Lynn LaRowe

A mo­tion re­cently filed in Texarkana, Texas, bank­ruptcy court seeks ap­proval to sell the Ar­kan­sas Con­ven­tion Cen­ter for more than $6.5 mil­lion.

Texarkana Ho­tels LLC, which is owned by Hiren Pa­tel, a med­i­cal doc­tor who used to prac­tice in Texarkana, filed a mo­tion Feb. 10 seek­ing au­tho­riza­tion from a bank­ruptcy judge to sell the prop­erty to James Naples of Texarkana for $6,550,000 in cash. Texarkana Ho­tels filed for bank­ruptcy last year in the wake of MidSouth Bank’s ef­forts to fore­close on the prop­erty to re­coup mil­lions in un­paid debt.

The mo­tion filed on Texarkana Ho­tels’ be­half by Dal­las lawyer Bill Payne, seeks to con­vey tax ben­e­fit agree­ments from the city of Texarkana, Ark., and the city’s Ad­ver­tis­ing and Pro­mo­tion Com­mis­sion. The tax ben­e­fits, ne­go­ti­ated at the time of con­struc­tion of the con­ven­tion cen­ter and an ad­ja­cent wa­ter park, could be worth mil­lions over a pe­riod of years.

The city and A&P Com­mis­sion filed

ob­jec­tions to a con­veyance of the tax ben­e­fit agree­ments in Jan­uary when plans to sell the con­ven­tion cen­ter to the high­est bid­der were an­nounced. The ob­jec­tions com­plain that the orig­i­nal agree­ments ne­go­ti­ated with Pa­tel and Texarkana Ho­tels in 2009 con­tained lan­guage stat­ing that the tax ben­e­fits can’t be con­veyed with­out the ap­proval of the city. The ob­jec­tions also point to a leg­isla­tive au­dit per­formed by state of­fi­cials which found in 2014 that at least some of the tax ben­e­fits, in­clud­ing a dra­mat­i­cally re­duced price for wa­ter, vi­o­late Ar­kan­sas law.

The mo­tion to sell the Ar­kan­sas Con­ven­tion Cen­ter to Naples ac­knowl­edges the pend­ing ob­jec­tions. The mo­tion asks the court to ap­prove con­veyance of the tax ben­e­fit agree­ments to Naples but states that, “such an ap­proval is not a con­di­tion to clos­ing. More­over, any de­ci­sion by the court to not ap­prove as­sump­tion ad as­sign­ment (of the tax ben­e­fit agree­ments) does not re­sult in a de­crease or re­duc­tion of the pur­chase price.”

A hear­ing to ad­dress the city’s and com­mis­sion’s ob­jec­tions hasn’t been sched­uled.

If Naples does pur­chase the Ar­kan­sas Con­ven­tion Cen­ter, he won’t be able to op­er­ate it un­der the Hol­i­day Inn brand un­less he en­ters into a new li­cens­ing agree­ment with Hol­i­day Hospi­tal­ity Fran­chis­ing, ac­cord­ing to the mo­tion.

An­other Pa­tel-owned com­pany, Kr­ishna As­so­ciates, re­cently sold a Texarkana, Texas, ho­tel to Naples with ap­proval from the same bank­ruptcy court from which Texarkana Ho­tels seeks ap­proval to sell the Ar­kan­sas Con­ven­tion Cen­ter. Naples pur­chased Coun­try Inn & Suites in Texarkana, Texas, for $2.9 mil­lion.

MidSouth Bank, which holds the notes on the Ar­kan­sas Con­ven­tion Cen­ter and Coun­try Inn & Suites, has filed a pe­ti­tion in bank­ruptcy court al­leg­ing Pa­tel should re­main per­son­ally li­able for any out­stand­ing debt not sat­is­fied by prop­erty sales. Pa­tel and his wife per­son­ally guar­an­teed the loans and with­out a dis­charge from a bank­ruptcy pro­ceed­ing, could be held li­able for un­sat­is­fied debt.

MidSouth’s pe­ti­tion, filed in Au­gust 2016, ac­cuses Pa­tel of trans­fer­ring large sums of money and real es­tate ti­tles into the names of fam­ily mem­bers prior to the bank­ruptcy fil­ings and while the Pa­tel-owned com­pa­nies were reg­u­larly miss­ing monthly pay­ments to the bank. Docket en­tries from Novem­ber in that case note that a hear­ing is sched­uled for Au­gust of this year.

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