Minor filing: Halsey files bankruptcy for Landmark hotel
The company owned by bi-coastal Internet millionaire Halsey Minor to develop the stalled Landmark hotel on the Downtown Mall declared Chapter 11 bankruptcy Wednesday, September 1, in the federal bankruptcy court in Lynchburg.
Court filings indicate that Minor has directed the Roanoke-based law firm of Woods Rogers to handle the situation.
Minor recently won a $6.6 million victory against developer Lee Danielson in the hotel fiasco, but the two sides are slated to spar again on November 1, court records say, with a three-week trial in Atlanta, where Minor had been sued by Danielson and the project's Georgia-based lender.
The largest unsecured creditor in the bankruptcy of Minor Family Hotels LLC, which is headquartered at Minor's sumptuous Fox Ridge farm in Free Union, appears to be Minor's lawyer, Betty Shumener of the Los Angeles-based firm DLA Piper. A court document shows that Minor's company owes Shumener $3,047,360.
Despite the seven-figure debt, Shumener–- who bills her time at $790 per hour–- appears to have recently begun representing Minor in another matter after his original legal team began bailing out. On July 30, the L.A. firm of Browne Woods George asked the court to let it stop representing Minor after Sotheby's auction house conquered Minor in a $6.64 million judgment.
Sotheby's lawyer was portraying Minor as "unresponsive to prior court orders" and asserted that he has "obstructed" enforcement of the judgment. "It seems," Sotheby's lawyer John Cahill wrote in a motion, "that even Minor's own attorneys have incredible difficulty directly contacting Minor."
Indeed, Minor's lawyer, Eric George, in begging the court to leave his client behind, noted that relations between his firm and Minor have "broken down irreparably" and that communications have been "rendered impossible."
Repeated comment requests to Minor's publicist, Aaron Curtiss, have yielded no result on the lawyer switcheroo. However, in a press release dated Thursday, September 2, Curtiss quotes Minor as pinning blame for the hotel's troubles on others.
“It is unfortunate that our lenders and the FDIC have forced us to take this step," Minor says in the release. "However, the Chapter 11 process provides us with the most expeditious manner in which to resolve the litigation that has effectively shut down the project and put people out of work."
In a filing, Minor tells the bankruptcy court that he invested nearly $7 million into the hotel and asserts that the lender–- the now-failed Specialty Finance Group–- "breached its obligations to fully fund the loan." That breach, Minor alleges, halted construction and launched numerous lawsuits.
Not counting the $3 million claimed by his lawyer, Minor's company owes several hundred thousand dollars including $4,143 for an L.A. court reporter, $8,900 to architect Neil Bhatt, and nearly $15,000 for lawyer Steve Blaine, the only local name on the top-20 creditors list.
Minor is a major Charlottesville-bred success story. Having co-founded technology news firm CNet and several other successful internet companies, he amassed a fortune once estimated at over $350 million, and he once publicly expressed interest in becoming Virginia's governor.
In recent years, however, he has become the target of several creditor lawsuits. He traces his liquidity woes to Merrill Lynch, but–- perhaps bolstered by a victory over Christie's auction house–- he has begun lashing out at other perceived enemies. For instance, in July, he penned a Huffington Post opinion column to scold the FDIC as a threat to American prosperity. That same month he began accusing the Hook of unspecified defamation and warning the editor of an impending lawsuit.
When the Hook last tallied Minor's lawsuits a year ago, he had lost a suit to Merrill Lynch but was still waging a suit and countersuit against the two auction houses, at least two suits and two countersuits against the Landmark developer and its lender, and a case against the City of Hialeah, Florida over its decision to sell its historic horse-racing track. In August, he sued a company called Lithium Technologies for allegedly deceiving his venture capital firm by misrepresenting its value.
Chapter 11 is the form of bankruptcy in which creditors are typically asked to accept pennies on the dollar for the amounts they're owed. Rather than fold the company, Minor asserts in his press release that he's eager to put workers back on the job and finish the hotel. But his former business partner expresses doubt.
"This is just another stall tactic–- a big gamble–- and it may backfire on him," says Danielson, reached in California by telephone. "This is reality TV at its worst. Who would ever want to deal with this guy?"
Regarding the burning question of when construction might resume at the Downtown Mall's 11-story eyesore, the answer depends on such things as the willingness of the creditors to accept less than they're owed, the bankruptcy judge's view of the settlement, the outcome of the various pieces of litigation, and on the wishes of the FDIC, according to legal analyst David Heilberg,
"In a situation this complex," Heilberg notes, "a lot of dominoes have to line up."
Heilberg notes that besides the hotel shell and the property on which it stands, the only other big asset Minor's bankrupt company appears to hold is the $6.6 million arbitration award recently won from Danielson.
"Right now, that's a piece of paper," says Heilberg. "You have to collect on that."
Already, there is a luxury hotel on the hotel in the form of the $229-per-night Omni, and Heilberg figures the Omni won't get any high-end competition anytime soon.
"Someone could come in and buy it out of bankruptcy, but it could take several years," says Heilberg. "I think the real problem is the economy."
As this issue was going to press, a filing reminds the Hook of yet another lawsuit involving Minor, an attempted foreclosure action by Clancy & Theys Construction Company, the firm that built the Landmark shell. Minor has petitioned the bankruptcy court to move that creditor action–- along with Minor's $7 million counter-claim–- into his bankruptcy case. The court has set December 20 for a hearing at the federal courthouse in Charlottesville.
–updated 4:47pm on Friday, September 3 with the info after the first asterisks
–updated 11:02am on Tuesday, September 7 with info after the second asterisks