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Letter says hotel didn’t maintain accounting records
Published Thursday, July 2, 2009
Numerous unpaid liabilities. Major deferred maintenance issues. Cash-flow problems. No apparent bookkeeping.
These are just a few of the concerns the receiver of the Albert Lea Inn reportedly discovered during the first three weeks after taking over management and operations of the hotel at the end of April through the middle of May.
In a letter filed in Freeborn County District Court from Patrick Finn, vice president of Lighthouse Management Group, to Judge John A. Chesterman, Finn describes the attempts his company has taken to manage the operations of the hotel, which is in mortgage foreclosure.
According to the letter, on April 24 the receiver contacted Tonya Navarro, one of the hotel’s owners, during which Navarro told him that Blue Dragon Properties LLC — the managing company for the hotel — had roughly $300 in its checking account.
Alliant Energy was expected to disconnect service on April 27 unless a past due balance of about $10,000 was paid. At that time she had just issued payroll checks.
Finn stated Madison Hospitality Group was hired to operate the hotel on an interim basis and conduct an assessment of the business’s operations.
A Madison employee stated the office at the hotel was found in disarray, and there were found to be no accounting system, equipment records or vehicle records in the office. The reservation system at the hotel was also not functioning, according to the letter.
That employee asked Navarro where the computer was that had been in the office, and Navarro claimed it was her personal property and that she had removed it, according to the document.
On April 27, the city of Albert Lea disconnected water service to the hotel because of a past-due balance of about $2,100. The insurance premiums were also found to have not been paid, documents stated.
At that time, the facility closed.
Though American Bank of St. Paul agreed to advance the funds needed to restore water service, the management company did not reopen the motel.
The letter stated the receiver indicated that a minimum of $75,000 was needed to reopen the motel. This did not include any allocation for property taxes or deferred maintenance issues, including roof repair, linen replacement and repairs to the HVAC system.
Ballpark estimates of a roof replacement would cost in excess of $300,000.
According to the letter, other unpaid liabilities included:
Unpaid state sales tax in excess of $39,900.
Unpaid property tax for 2007 and 2007 in excess of $53,500.
Unpaid payroll taxes in excess of $30,000.
Unpaid utilities in excess of $20,000.
Unpaid trade payables in excess of $70,000.
The receiver went on to say that Navarro did not cooperate well, though it was required of her in the court order.
“Her failure to make herself available to the receiver and provide the information requested from her in a timely manner has resulted in unnecessary expense and effort on the part of the receiver and Madison,” the letter stated.
It continued by saying Navarro refused to provide information regarding group bookings and reservations, refused to provide accounting and business records, refused to provide all necessary keys and access devices, and refused to allow reasonable access to the suite she is occupying, among other things.
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Comments
Posted by realtree (anonymous) on July 2, 2009 at 10:28 a.m. (Suggest removal)
Well I guess when your down you might as well go out kicking!!!!!
Posted by 57boy (anonymous) on July 2, 2009 at 12:15 p.m. (Suggest removal)
looks like another case of TAKE THE $$$$ & RUN !!! Who cares about bills,live the high life & forget who you owe,they don't need the money.What a shame!!
Posted by mar (anonymous) on July 2, 2009 at 1:59 p.m. (Suggest removal)
I met Tonya in the beginning, and she did say she didn't have any experience with running a business or accounting. She took on a huge business plan, without realizing how overwhelming it can get. I don't think she wanted to take the money and run. I just think she didn't realize how many businesses you are actually taking care of with a hotel. After I thought about it more....A Bar, A restaurant, rooms, banquets & Functions, Payroll, It's like over 5 business in one package. Owning a hotel at first would seems cool, but one as big as that one, was a huge responsibility for someone with no experience. Yes, she will have to take care of her mismanagement, but she doesn't have to have people judging her while she trying to figure it out. That's what makes her more defensive. When things go wrong like that I think it's human nature to try and protect yourself, hopefully she will start cooperating, so that it can be put in order, cuz it's not going to disappear. Good luck to the company taking over. Looks like they have made a lot of progress.
Posted by realtree (anonymous) on July 3, 2009 at 1:08 a.m. (Suggest removal)
Well one thing is for sure whom ever takes over now will have at least 300,000 dollar roof fix beside general up keep who would want that!!! I feel sorry for the person taking over
Posted by demo1960 (anonymous) on July 6, 2009 at 2:52 p.m. (Suggest removal)
People go to school to be accountants. Just like any other profession. You don't learn it on the job. Does she do her own taxes also? I have to wonder about the bank that borrowed her the money for the business. What kind of business plan did she have? Why was the hotel being sold in the first place? Not feeling to sorry for her - just the people she employed. Not the first time people have lost their jobs because of mismanagement.
Posted by mar (anonymous) on July 8, 2009 at 1:43 p.m. (Suggest removal)
I think there was a lot of issues going on about purchasing that hotel in the first place. I noticed there was a man in the first court document listed, Is her ex going to be responsible too? They purchased it together, and I don't think you can sign off on a loan like that or back taxes. I think when they bought that Hotel, it needed a lot of work left from the previous owners, including a new roof. The rooms needed remodeling when she bought it. I thought that the Bank usually considers those expenses before loaning money to buy the property. A $300,000 roof and all the rooms needing remodeling before she purchased should have been considered before she attempted the project. They did a wonderful job with the dining room and Bar, but maybe should have left the new Bar until the rooms and roof was done. That's probably all irrelevant now, but by the way some of the comments are stated, it does seem kinda questionable on how she got a loan like that in the first place.
Posted by mar (anonymous) on July 8, 2009 at 2:03 p.m. (Suggest removal)
The taxes seem like a huge problem from the start, she needed an accountant, the utilities looks like she had been taking care of, A large Hotel like that probably pays has very high monthly utilities, so it probably didn't take much to get to $20,000 when her problem with taxes seem to take notice.
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