By james art Chapter 11 bankruptcy gives Reno’s stalled boutique hotel project time to reorganize after defaulting.
A stalled downtown hotel project has just filed for bankruptcy a day before it’s set to be put up for sale on the courthouse steps.
A Chapter 11 bankruptcy petition was filed Monday by developer CAI Investments for its Reno Kimpton project, according to public records.
The filing comes four months after the project was hit with a notice of default by Court Street Ventures LLC on an $11.3 million loan agreement. In addition to the aforementioned loan, which originally originated on December 15, 2021, CAI also has a $100 million construction loan with Pinnacle Lending Group.
The Reno Kimpton project missed its first payment on Aug. 5, 2023, according to Washoe County records. It then failed to satisfy the loan balance or negotiate an amended loan agreement by the December 15, 2023 deadline.
CAI says it is continuing negotiations for a deal ahead of the property’s scheduled Oct. 30 sale.
“We would like to work in good faith for a workout (default) before the sale,” Chris Beaver, CEO and founder of Las Vegas-based CAI Investments, told the Reno Gazette Journal when reached last Thursday.
“In the event that they don’t extend the deadline, we’ll just have to file Chapter 11 (bankruptcy).”
How Did the Kimpton Reno Project End Up Unpaid?
The bankruptcy filing marks a stunning turnaround for the Kimpton Reno project, which began with much fanfare in the spring of 2022.
The groundbreaking was celebrated with a big party at Wingfield Park downtown and was attended by local officials and Kimpton Hotels and Restaurants CEO Mike DeFrino. However, issues with several neighboring properties stalled the project, including a messy legal battle with a century-old house over an outdated sewer line.
Although CAI will ultimately prevail in the case, the delay will require the project to start over, according to Beavor. This meant obtaining new permits, assessments and environmental reports.
“I had to restart the project from scratch,” Beaver said.
Beaver also blamed delays for the project’s failure. It was a point Beaver reiterated Monday night after the bankruptcy filing.
“The impact on the city’s sewer line delays cost a significant amount of time and cost to the project,” Beaver said. “The land was worth zero and could not be built on until the sewer line issues were resolved, which was after the loan was due.”
Beaver emphasized that he still plans to continue the project despite its setbacks.
CAI continues to update plans for the hotel, including removing previously planned office spaces and adding co-ops instead. The total number of hotel keys was also reduced from 270 rooms to 225 rooms.
Beaver added that he has already spent about $8 million on the Kimpton project and has no intention of giving up.
“The project is still viable,” Beaver said. “This (bankruptcy) will allow the time needed for restructuring to complete the project.”