A planned foreclosure auction of the Ramada Inn Inner Harbor was called off yesterday after the owners of the 87-room hotel at 8 N. Howard St. filed for permission to reorganize the hotel's finances under federal bankruptcy law protection.
The Chapter 11 filing by Summit Investment Ltd. Co. triggered an automatic stay barring creditors from taking any action against Summit, including the auction.
Summit owes Trisun Investment Group Inc. of Pikesville $792,000 on a $900,000 mortgage taken out in 1992, according to papers filed in a foreclosure action in Baltimore Circuit Court. The papers said interest was accumulating at $363 a day.
U.S. Bankruptcy Court Judge E. Stephen Derby refused Trisun's motion to dismiss the bankruptcy action, Trisun attorney David O. Whitman said.
"We intend and plan to file a plan of reorganization that will comprehensively deal with the debt structure and future of the hotel," said John Martin Klein, an attorney for Summit.
Mr. Klein said Summit had made its principal payments on the loan until early this year but could not make a balloon payment when the note matured. The bankruptcy petition said Summit has between $1 million and $10 million in both assets and liabilities. The hotel has between 20 and 99 employees, the petition added.
Alan M. Grochal, another attorney for Trisun, said the next move will come tomorrow, when the creditors will try to persuade Judge Derby not to let the hotel's owners use cash from its operations while they plan a reorganization.