CHARLESTON – The West Virginia State Tax Department is asking for the federal bankruptcy case filed in Florida to be transferred to West Virginia.
In two separate but related cases, the tax department alleges that the owner of the Hilton Garden Inn was forum shopping by filing the bankruptcy case first in Georgia and then in Florida. The owner, William Abruzzino, who is a West Virginia native, now lives in Florida.
The tax department claims it is owed $587,000 in taxes that were collected over several years by the Morgantown hotel but then not passed on to the state. The total that should have been passed on by the Clarksburg and Elkins hotels is $720,000.
Mountain Blue, which is Abruzzino’s ownership group for the Morgantown hotel, was dismissed from Georgia bankruptcy court earlier this month because it had failed to meet a deadline to prove it had workers’ compensation insurance.
The very same day, Mountain Blue filed for Chapter 11 reorganization in the U.S. District Court for the Middle District of Florida, which placed an automatic stay in a West Virginia lawsuit filed by the lender of the hotel’s loan. That lawsuit was filed in the U.S. District Court for the Northern District of West Virginia.
The tax department claims that the bankruptcy case should be filed in West Virginia because the hotel is here.
The tax department claims that while the debtor claims the Florida district as its principal place of business, the debtor does not appear to own or lease office space in Florida, is not even registered to do business in Florida and can hardly claim the Middle District of Florida as its principal place of business
“But perhaps most importantly, for present purposes, all of the debtors business operations and assets are located outside this district and within the Northern District of West Virginia, where the bankruptcy cases of two different affiliates of the debtor remain pending,” the Nov. 22 motion to transfer states.
Abruzzino managed the debtors’ and many of his affiliated entities out of offices located in Fairmont for many years until he recently closed that office and “moved” the affiliated debtor entities’ “principal place of business” to Florida, according to the motion.
“The bottom line, considering all of the relevant facts and circumstances identified by the courts, including this court, is that the case belongs in the Northern District of West Virginia where the debtor’s operations, properties, and assets and most of its creditors and other parties in interest, including the state and local governments, reside,” the motion states.
The lender for the hotels in Clarksburg and Elkins has also objected to the tax department’s motion to intervene in the case.
It claims Mountain West Hospitality is defaulting on a $19 million loan for two hotels. It also contends that the hotels have resumed paying taxes while under the management of a receiver.
“All post-receivership taxes are being paid. As to the pre-receivership taxes, the State has its full range of remedies available in this and other forums, and therefore Plaintiff need not protect the State’s interest in enforcing its tax laws,” the lender wrote.
