The woes of the ownership group behind the Radisson Hotel continue to deepen in Menomonee Falls.
On Tuesday, attorney Randall Crocker, who’s representing the village in its ongoing receivership involving the Radisson Hotel, filed a temporary restraining order of hotel owner Jim Heyden, which prohibits him from stepping onto the hotel property.
Waukesha County Circuit Court Judge Donald Hassin signed the restraining order Tuesday.
According to Tom Daykin of JSOnline, the restraining order also temporarily prevents Heyden from using or selling any assets pledged as collateral to pay back the $17.65 million village-issued loan given to the original ownership group to develop the hotel.
According to court documents, a second issue centers on drained checking accounts and payments not being made. The ownership group, Lodging Investors of Menomonee Falls, has failed to make its first two semiannual $700,000 payments owed on the village loan.
Court documents indicate that the Department of Workforce Development currently also filed a delinquent unemployment tax warrant for Heyden with the Waukesha County Circuit Court earlier this year. Court documents indicate Heyden currently owes $17,796.
Village leaders met in closed session Monday to discuss the pending receivership litigation. Village Manager Mark Fitzgerald couldn’t comment on what occurred in closed session. However, news regarding the Radisson Hotel should be forthcoming in several days.
“Soon but not in the next seven days,” Fitzgerald said. “The reality is that we won’t have a statement for a while. At some point we will have a statement and issue an official press release.”
What that will statement will contain is unknown at this point.
Additionally, for the third Village Board meeting in a row, Radisson Hotel contractors on Monday who are owed money for work completed on the hotel over a year demanded answers from the village as when they will get paid. The group of about four contractors could only speak during the public comment section of the meetings.
A Troubled Past
In April 2010, the village that featured a $17.65 million loan to kickstart the hotel construction. The ownership group included Heyden, Gilbert, Dean 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 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 worth.
Then, Grosskopf’s hotel management firm, Professional Hospitality, became 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.
That spurred the village to take preemtive action and appoint a receiver to monitor day-to-day operations at the hotel and its revenues in November. At the time, Fitzgerald said officials were concerned but optimistic.
"The Village Board of Trustees is certainly concerned about recent events involving the Menomonee Falls Radisson Hotel and the outside litigation that is pending against current owners," Fitzgerald said in a statement at the time. "However, the Village Board of Trustees believes that the appointment of a receiver is a prudent measure to take to assure the community and its citizens that the hotel’s operations will be legally protected during this period of outside litigation."
As part of the developer agreement crafted by the village, the hotel’s ownership group was required to make scheduled payments on the principal of the loan. However, the group failed to make its first $700,000 payment when it came due in November. A total of $4.1 million in principal is due to be paid by the partners over the next four years. According to the development agreement, the loan will be paid in full by the time the calendar turns to 2026.