Formal notice has been sent to the long list of creditors to which Crowne Plaza Hotel owner Zeus Investments LLC owes money. As expected, the company has filed for Chapter 11 bankruptcy.
Troubles for the Houston-based company that transformed the Hotel Acadiana on Pinhook Road into a Crowne Plaza Hotel, the upscale offering of the Holiday Inn chain, have been brewing from the start of the $10 million renovation that began in February 2008.
The project was under way for almost a year without the proper permits required by the city — and the unlicensed contractors who started the job performed subpar work that forced local officials to temporarily shut down the project in February 2009. By the time the cease and desist order was given, the massive renovations had not received a single inspection for plumbing, mechanical and electrical work taking place at the hotel.
Dodging public building inspections is an egregious violation of state and local laws, especially when the inspections are for a hotel that will potentially house hundreds of guests. Read more in this February 2009 ABiz cover story, "Uneasy Lies the Crowne."
The upgrade plans were able to move forward when the company replaced its unlicensed contractors with state-licensed architects, engineers and contractors to finish the work, and the hotel began flying the official Crowne Plaza flag in 2009. But Zeus Investments has since been the target of at least 15 civil lawsuits filed in state district court, all for money owed to various companies that helped with the extensive renovations.
One recent lawsuit, filed Jan. 27 by St. Martin Bank against Zeus Investments, is trying to seize the hotel as collateral for falling behind on a more than $12 million loan. A source close to the bank told The Independent Weekly in early March that five banks are involved in the loan, but it is unclear which banks teamed up and whether they are local. That source also said in early March that Crowne Plaza has been trying to restructure its debts and catch up on its loan payments.
Crowne Plaza General Manager Jeff Keefe did not return a call for comment on the Chapter 11 granted to the company on March 24, but he did offer a prepared statement in early March in response to questions about the company’s financial standing and its ability to make good on its millions of dollars of debt.
In his statement, Keefe cited numerous “challenges” the hotel has faced since the upgrade, including “a longer than anticipated renovation due to contractor fraud, additional hotels being built in the Lafayette market and the direct impact the BP oil spill and drilling moratorium has had on our local economy.”
“The hotel owners have made several changes over the past six months to include hiring a new management company and several key employees, which is having a positive impact on the hotel’s ability to provide superior service,” he said in the statement.
Keefe also noted the reopening of Scandals Nite Club in the hotel, which is expected to open its doors April 13, according to the “Official Scandals Nite Club of Lafayette” Facebook page.
The bankruptcy notice says a creditor meeting for Zeus Investments will be held at 11 a.m. May 10 at the U.S. Bankruptcy Court’s Lafayette office at 214 Jefferson St.