Mountain Blue Hotel Group blames economy, debt payments for failure to pay state, local taxes

By Kyla Asbury | Dec 19, 2017

CHARLESTON – Mountain Blue Hotel Group filed a response to a lender blaming the economy and debt payments it had to pay for why it fell behind on paying its state and local taxes.

External economic factors beyond the debtor’s control have resulted in a significant decline in revenues over the past few years at the debtor’s hotel property, Hilton Garden Inn in Morgantown, according to the Dec. 17 response.

Mountain Blue alleges while the lender is most sanguine in blaming it for every misdeed imaginable, the reality is that the lender was the party in complete control of the hotel enterprise, who effectively controlled the purse strings and made all the important business decisions.

The investors are trying to regain access to the hotel, which was previously transferred to a receiver.

Mountain Blue is owned by an investment group led by William Abruzzino.  The hotel is one of several Abruzzino properties currently the subject of lawsuits or bankruptcy proceedings.

Mountain Blue claims the it could manage the hotel at a lower cost than the receiver, who is charging in excess of $20,000 per month for “unexplained management and administrative fees.”

“…it is clear that the lender’s motion, and supporting affidavit by Leah Solomon, are intentionally designed to cast the debtor in the most negative light possible and in some instances provide only selected facts in order to do so,” the response states.

Mountain Blue claims when all of the facts are presented, it is clear that it was not, and has never been, engaged in “gross mismanagement” and should be permitted to operate the hotel as Debtor in Possession.

“In each instance where the debtor failed to pay an expense of the hotel, whether franchise fees, sales taxes or hotel/occupancy taxes, that failure has resulted solely from the unavailability of sufficient funds to do so once the lender paid itself no matter the economic circumstances of the hotel,” Mountain Blue claims.

Mountain Blue says revenues from the hotel were sent automatically to a Wells Fargo-secured lock box account as required by the lender, which did not adjust to the reality of the economy.

“In the latter part of 2016 and continuing into 2017, the decline in revenues was such that the Debtor was not receiving sufficient funds each month to pay the lender and all of the hotel’s ongoing operating expenses,” the response states.

Mountain Blue is requesting that the lender’s motion to excuse the federal court receiver from turning over the debtor’s property be denied and that the debtor’s motion to compel the receiver to turn over the hotel to the debtor be granted.

U.S. District Court for the Middle District of Florida case number: 9:17-bk-09667

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