Another member of the Radisson Hotel’s ownership group has filed for bankruptcy.
Dean Grosskopf, co-owner of the hotel, filed for Chapter 7 federal bankruptcy Tuesday and now has until Dec. 11 to list his creditors. Grosskopf’s filing comes just over a week after village leaders petitioned the courts to expand the authority of the receivership attorney, who is overseeing day-to-day business activities at the hotel.
Village Manager Mark Fitzgerald on Friday said Grosskopf’s filing came as little surprise.
“It was expected on our part, and based on our filing for an expanded role for the receiver, we knew that was coming. It doesn’t impact how we are proceeding forward,” Fitzgerald said.
On Nov. 18, attorneys representing the village, hotel subcontractors and hotel owners petioned the Waukesha County Circuit Court to expand receivership attorney Seth Dizard’s authority in order to safeguard the hotel’s value. Dizard would use his expanded authority to market and negotiate deals to sell the hotel, and would also drastically reduce or eliminate Grosskopf’s monthly $10,000 income from the hotel.
A hearing was scheduled for 8:30 a.m. Feb. 8. The delay in moving forward with the hearing is due Waukesha County Circuit Court Judge James Kieffer's vacation. All parties wished to keep Kieffer as the judge, and agreed to the longer timetable.
Currently, Dizard is only authorized to maintain status quo operations at the hotel, but he doesn’t have the authority to take some actions deemed beneficial and necessary to the hotel. The village’s attorney, Randall Crocker, said negotiations to settle a pending foreclosure lawsuit have reached an impasse, and simply maintaining the status quo won’t be enough to reach an amicable resolution.
A Troubled Past
In April 2010, the village inked a development agreement with Lodging Investors that featured a $17.65 million loan to kickstart the hotel construction. The ownership group included James Heyden, David Gilbert, Grosskopf, Paul Nooyen and William Krueger.
However, things quickly went south after the village approved the loan. In October 2010, Gilbert, who was a 10 percent owner of the hotel, filed for Chapter 7 bankruptcy. According to documents from the U.S. Western District Court, Gilbert’s assets were worth some $3.3 million, but he had outstanding liabilities of $106.4 million.
That was just months after Gilbert provided necessary documentation to ensure he had necessary net worth to account for his portion of the hotel’s value.
Then, Grosskopf’s hotel management firm, Professional Hospitality, became embroiled in a civil fraud lawsuit in Dane County Circuit Court. According to the suit, Madison investor, Gregg Raup, is accusing Professional Hospitality of wrongfully diverting $1.2 million from hotels in Beloit and Green Bay to the Radisson Hotel in Menomonee Falls.
The village appointed Dizard to oversee the hotel's operations in November 2011 after the ownership group failed to make its initial repayments on the village's loan. Since appointing the receiver, the hotel's financial obligations have been paid and its revenues have increased. The hotel's operations are expected to continue uninterrupted for the foreseeable future.