In these tough economic times, it is all too common to hear of Colorado businesses facing foreclosure proceedings. However, it’s not always realized that these actions could indicate a positive turn in terms of the businesses’ futures. In some cases, the foreclosure may have even been part of the property owner’s well-thought-out business plan.
This is the case in Pueblo, where New Vision LLC, the owner of a local Clarion Inn intentionally defaulted and then used the foreclosure notice received from its lender to spur a refinancing deal that will hopefully spur growth and prevent the business from going under. Their lender, like many across the nation, was refusing to discuss loan refinancing options when the mortgage was not in default. The inn had seen decreased profits due to the downtrodden economy and several new area hotels, so the owner made the careful decision to stop making payments on the loan.
The strategy worked, with the lender, Beach Business Bank, agreeing to a refinancing deal that is set to be finalized in October. The hotel, which has remained in operation throughout the proceedings, plans to make improvements including upgraded televisions in the guest rooms and a remodeled lobby. As part of the refinancing plan, the bank will finance the hotel’s unpaid property taxes and the owners will save more than $200,000 annually due to their reduced interest rate.
When a business owner is facing foreclosure or taking part in a number of any other business transactions, the advice of a lawyer who handles business and commercial matters can be an invaluable asset. They have intricate knowledge of matters concerning business plans and restructuring and can help the owner navigate these complicated waters and make the best choice for the future of the business.
Source: The Pueblo Chieftain, “Hotel announces refinancing deal,” Dennis Darrow, Sept. 27, 2011