City Loft Hotel in downtown Beaufort is filing for bankruptcy so it can restructure its debt, but it will remain open, according to a company spokesman.
The company filed for Chapter 11 bankruptcy Friday.
"In the meantime, City Loft enjoys excellent relationships with its vendors, owes no back taxes and is current with all permits and licenses. City Loft Hotel looks forward to an early exit from Chapter 11," spokesman John Williams said in a news release Monday.
Owner Matt McAlhaney opened the 23-room boutique-style hotel in September 2009 after 18 months of renovations. The building at 301 Carteret St. was a Red Carpet Inn and the Lord Carteret Motel.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
McAlhaney took out a loan with a local bank that failed in 2010, according to Williams, and the debt has been shuttled to various out-of-state lenders since then.
"For quite some time now, City Loft has made repeated offers to service debt under reasonable terms, including offers of escrowed money to the banks' favor, with no success," Williams said in the release.
The hotel has no cash-flow problems, he added.
Williams declined to name the banks involved, but the bankruptcy filings show the largest loan, for $4.2 million, is held by Bank of the Ozarks in Arkansas.
City Loft filed for Chapter 11 bankruptcy in an attempt to enlist the court as it tried to restructure the loan, according to Williams.
"Bottom line, this is a financial reorganization," he said. "This is not closing doors. Nobody is losing jobs. That hotel is one of the anchors of downtown, and we'd like it to stay that way."
The City Loft Hotel won an award from Main Street Beaufort USA last year for rehabilitating the building, Main Street executive director LaNelle Fabian said.
"We're always excited when anyone rehabs a building and still preserves the architecture and the historic aspects," she said Monday. "...We don't want it vacant, of course, so if they stay open, that's good news."
Follow reporter Erin Moody at twitter.com/EyeOnBeaufort.
- Main Street honors businesses that make a difference, May 24, 2010
- About Town: City Loft Hotel opens in downtown Beaufort, Oct. 4, 2009
- New hotels will bring luxury to a new level, Oct. 29, 2007