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There was no 11th-hour reprieve or last-minute deal.
In the end, no bidders came forward.
Los Alamos National Bank set a minimum bid at $2.9 million, to secure the Hilltop House Hotel during a foreclosure auction in front of the Justice Center Wednesday, just before noon.
Approximately 20 people were in attendance as special master John Morse read the conditions of the sale.
Morse announced the bank had submitted a $2.9 million bid. He then asked everybody in attendance if there were any other bids.
There was silence.
Morse then awarded possession of the hotel to the bank.
LANB president Steve Wells said the bank never favors the foreclosure process “but unfortunately, this was the only option we had left.”
Wells then explained the process of what happens next.
“This process requires the judge presiding over the foreclosure to approve the auction transaction and that can take up to a week depending on the judge’s workload and of course any concerns, which we do not expect,” Wells said. “New Mexico law allows for a 30-day redemption period where the debtor can redeem the property with payment of the amount required.
“While we do not anticipate this happening, it is a possibility that the bank must allow for and therefore we generally do not take any actions during that period other than to protect the property for which we are now responsible. We will then pursue the best alternative available to return the funds loaned on this property to the bank so we can put the money back to work in the community.”
According to a legal notice published in the Los Alamos Monitor last month, the total amount awarded by the judgment to Los Alamos National Bank with interest to the date of the sale was approximately $4.5 million plus additional costs and attorney fees. The amount of interest at that point was more than $500,000.
The Los Alamos National Bank put the wheels in motion to foreclose on the company that owned and managed the Hilltop House Hotel back in October.
Hotel owners Ron and Kim Selvage, along with the hotel’s investor group, were hopeful that a deal could be struck with the bank to restructure the debt.
But terms couldn’t be reached.
Ron Selvage also said that he had numerous potential buyers step forward in the last month or so, but a deal could not be struck with the bank.
“They got the price down, they just couldn’t agree to the terms,” Selvage said.
In the meantime, the foreclosure auction was postponed twice.
Selvage said he felt especially bad for his employees.
“My biggest concern is the employees that will be out of work,” Selvage said. “If the buyer had come through, he would have kept the hotel open.
“Some of them have been there a long time. One of them was a cook back during the days of the Trinity Beverage Company.”
When asked if the bank would keep the hotel open, Wells said before the auction, “we have not made that decision yet. That would be putting the cart before the horse.”
The Selvages, who made personal guarantees to back the hotel’s mortgage, meanwhile, have filed for bankruptcy protection, according to the District of New Mexico Electronic Filing System.
They made the case filing in the United States Bankruptcy Court March 6 under Chapter 7 of the United States Bankruptcy Code. The debtor’s attorney is Christopher Gatton of Albuquerque and the trustee is Philip J. Montoya of Albuquerque.
“I could never get a dollar figure from the bank on how much I owed,” Ron Selvage said. “I assumed the worst, that we got stuck for all of it. So I decided to file.”
Wednesday’s auction signals an abrupt end for the 79-room hotel and convenience store/gas station that straddles some of the most high-profile commercial real estate leading in to downtown Los Alamos. Selvage said the gas station closed Wednesday and the hotel would shut down Sunday.
“That’s the agreement we made with the bank,” he said. “The deli will close Wednesday night and the hotel will close at noon Sunday.”
He then described what will happen next.
“The bank has a minimum amount it will bid and then take over the property. I don’t know if they are going to sell off the property or what. But whatever they sell it off for, I will have to pay back the remainder,” Selvage said.
He not only will owe the bank but also several of the vendors that did business with the hotel.
“They (suppliers) made me sign a personal guarantee so there is some debt there as well,” he said.