Saline Lodging Group Shareholders Shutout in Bankruptcy Deal
There are new owners with plans to complete the stalled hotel at 1250 E. Michigan Ave. in Saline.
Saline Hospitality LLC, which is connected to Bacall Group LLC, purchased the property from Your Enterprise Solutions LLC, for $2.8 million. Your Enterprise Solutions purchased the property from the Saline Lodging Group for $2.8 million in a court-ordered bankruptcy.
"The Bacall Group owns & operates more than 50 hotels in the Midwest region - they have a strong and impressive track record of successfully completing projects, while also being active in community affairs. City staff and I are eager to work with them," Mayor Brian Marl announced on his personal Facebook page.
Your Enterprise Solutions LLC bought the interest in the project from First State Bank, the bank that lent Saline Lodging Group the money for the development. YES LLC is managed by Elizabeth Haeussler, who is the daughter of Jim Haeussler, who is owner of Peters Building Company. Now in bankruptcy, Peters Building Company is the company that ran over budget, fell $6 million short of finishing the project and left many contractors unpaid. Peters Building Company is in bankruptcy proceedings.
In a court filing, Saline Lodging Group said Peters Building Company and Jim Haeussler caused to lose $3.5 million in construction financing because the company they were not diligent in the first construction phase. In addition, the Saline Lodging Group said they "misappropriated up to $1,500,000 in funds from SLG." The construction of the hotel stalled in April of 2020. Several contractors and First State Bank, the chief lender, joined a lawsuit seeking a judgment and foreclosure.
As part of the bankruptcy plan, the City of Saline and Washtenaw County will collect $129,000 in back taxes. Lawyers will also be paid.
(Correction: Two of the contractors, Hoffman Plastering and Quality Roofing, negotiated a settlement with YES LLC and may not have been paid in full)
Other creditors are being paid. Chelsea Lumber will be paid $75,789. Hoffman Plastering ($115,000) and Quality Roofing ($53,136) are also owed and will be paid, or was paid an undisclosed amount by YES LLC. Tri-County Electric sought $335,000 - but that claim was disputed by Your Enterprise Solutions. Instead, Tri-County Electric will receive $160,000, as agreed upon by the parties. Hoffman Plastering and Quality Roofing have apparently reached a deal with YES LLC
(Correction: The original story reported the lenders will be paid. They will not be paid )
Lenders also stand to lose. Your Enterprise Solution, which took on more than $3 million debt, will not recoup all of its investment. Local resident Bill Long invested $460,000 will not be paid.. American Investments LLC and Greystone Square LLC each stand to lose $250,000.
The bankruptcy plan proposed by Your Enterprise Solutions and approved by the federal judge stipulates that the Saline Lodging Group shareholders will not be paid.
There were 21 investors in the Saline Lodging Group, according to the preliminary bankruptcy documents filed in 2021. Most of the investors are from the Saline area. Shares cost $50,000 each.
The 21 shareholders were sent ballots to vote on YES LLC's plan for reorganization. Of the 21 shareholders, six submitted their votes by the deadline. Neil Bohnett (2 shares), Jim Haeussler (14 shares), Beth Ann Rentschler (2.5 shares). RJBO LLC (8 shares) and Sauk Trail Storage LLC (4 shares) accepted the plan. Peter Toarmina (undisclosed number of shares) rejected the plan. Wendell and Janet Deaton (one share) also voted to reject the plan but their ballot was filed late, according to a court document.
The Saline Lodging Group had plans to sell the hotel to a company that would pay the group's debts and complete the hotel, allowing investors to keep a share of the venture. That plan was contested by YES LLC and after the plan failed, United States Trustee Andrew Vara motioned to dismiss the Chapter 11 bankruptcy because no progress was made toward rehabilitation or liquidation.
According to Vara's motion, the partially-built hotel was in a state of disrepair and had been cited by the City of Saline for code violations, including broken windows, popped foam board, improperly sealed HVAC ports, and other evidence of water penetration.
The hotel property on East Michigan Avenue was owned by the City of Saline. It sold the property to Sauk Trail Properties Development LLC, which lists Jim Haeussler as the registered agent, for the development of the hotel and the Ace Hardware Store. Sauk Trail Properties sold the parcel to the Saline Lodging Group for $368,135.
Sauk Trail Properties sold the other part of the property to Sauk Trail Ct. Properties LLC, which lists Jim Junga as its agent.
The hotel was to be developed as a Best Western franchise by Mark Kuykendall, a Saline resident with a long history in the hotel business. The three-story hotel was to feature 63 rooms, a 36-seat restaurant and 18 seat bar, a 24-seat patio, a 1500-square-foot banquet room and a 400-square-foot board room.
The unfinished hotel was appraised Oct. 1, 2020 for $2,720,000 by Integra Realty Resources.