By Lorraine Mirabella, The Baltimore Sun
6:57 PM EDT, March 21, 2013
The family owners of The Inn at the Black Olive in Fells Point hope a bankruptcy filing Thursday will give them time to try to attract investors and keep operating the 2-year-old boutique hotel, their bankruptcy attorney said.
The Black Olive Development Co. LLC's Chapter 7 filing in Baltimore's U.S. Bankruptcy Court prevented a planned foreclosure auction of the 12-suite luxury inn on South Caroline Street from going forward Thursday morning.
Chapter 7 permits an orderly liquidation of assets to repay creditors, but the case could be converted to a Chapter 11 reorganization if the company finds investors.
The Spiliadis family, which also operates The Black Olive restaurant on Bond Street nearby, also hopes to negotiate with 1st Mariner Bank, the lender of $5.4 million, which foreclosed on the hotel in January, said the bankruptcy attorney, Gary R. Greenblatt.
Owner Stelios Spiliadis declined to comment Thursday. But Greenblatt, of Mehlman, Greenblatt & Hare, said the inn operators have several options. "The principals are attempting to attract some additional investors who might be interested in buying from the bankruptcy estate or trying to negotiate with the bank," he said.
Because of the timing of the foreclosure sale, "interested investors did not have enough time to do due diligence," Greenblatt said, but the owners "hope to put a package together to satisfy the creditors and allow the corporation in one form or another to continue operating the inn and the restaurants" at the hotel. These include rooftop restaurant The Olive Room and the Agora gourmet market and cafe.
He said several options, including selling the inn outright or bringing in additional owners, are being considered. "At this point, it's a very fluid situation," Greenblatt said. "Clearly, we have to finalize our opportunities sooner rather than later."
An attorney for 1st Mariner announced the bankruptcy filing to a small crowd gathered in the lobby of the still-open hotel Thursday as the auction was ready to go forward at 9 a.m.
The inn was developed and is run by Spiliadis; his wife, Pauline; and their son, Dimitris, who have sought to make the inn a showplace for cutting-edge ideas in "green" architecture and hoped it would serve as a model for environmentally responsible buildings in the area. It features geothermal heating, sustainable wood furnishings and a green roof.
Rooms in the hotel, which overlooks Harbor Point, go for upward of $300 a night on weekends and feature organic bedding and towels, harbor-view balconies and spa bathrooms with aqua-therapy tubs.
The Spiliadis family was selected in 1999 through a competitive bidding process by the city to develop the property, which was formerly a gas station. The hotel opened in 2010, a decade after they launched development plans.
Tourism experts have said the recession and slow recovery have made it difficult for tourist-dependent businesses at a time when downtown Baltimore has added hundreds of new hotel rooms. The area in and around downtown has added more than 970 hotel rooms in the last four years, according to the Downtown Partnership.
Boutique hotels have the added challenge of appealing to a niche traveler without the recognized name of larger, branded hotels. The Inn at the Black Olive, for instance, competes with larger luxury hotels such as the 256-room Four Seasons, which opened in 2011 in Harbor East.
In its bankruptcy filing, Black Olive Development listed debts ranging from $1 million to $10 million. Besides 1st Mariner, listed creditors include the Baltimore Community Development Corp., the Maryland Energy Administration and the Maryland Department of Housing and Community Development, which had provided a small loan to build the inn as part of a state program to help small businesses and revitalize communities.
Greenblatt said he expects to amend the bankruptcy filing in the next several days to supplement the list of creditors and to correct the value of assets listed in the filing. He estimated assets in the range of $1 million to $10 million.
The hotel's value is assessed at $3.3 million for property taxation, according to state records.
A creditors' meeting has been scheduled for April 30.
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