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Barring some 11th-hour reprieve, the Hilltop House Hotel will be auctioned off to the highest bidder on the steps of the Los Alamos Justice Center Wednesday.
Judge Sarah Singleton of the First Judicial District Court of Los Alamos ruled last month that the special master will sell the hotel at public auction for cash or certified funds at 11:45 a.m. Wednesday at the front entrance of the Justice Center.
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 to date is more than $500,000.
“It is my understanding there will be a sale tomorrow,” LANB president Steve Wells said Tuesday morning. “The special master will conduct the sale and accept bids on the property. The bank would be a bidder and whoever has the highest bid will take over the property.”
The Los Alamos National Bank put the wheels in motion to foreclose on the company that owns and manages the Hilltop House Hotel back in October.
Hotel owners Ron and Kim Selvage, along with the hotel’s investors, were hopeful that a deal could be struck with the bank to restructure the debt.
But it was not to be.
Ron Selvage also said that he had numerous potential buyers step forward in the past month but a deal could not be struck with the bank. In the meantime, the foreclosure auction was postponed twice.
Selvage said Tuesday, “it looks like it will go to auction tomorrow. The buyer and bank could not come to terms.”
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.”
When asked if the bank would keep the hotel open, Wells said, “we have not made that decision yet. That would be putting the cart before the horse.”
Ron and Kim Selvage, who made personal guarantees to back the hotel’s mortgage, meanwhile, have filed for bankruptcy, according to the District of New Mexico Electronic Filing System.
They made the case filing in the United States Bankruptcy Court March 6. It was filed 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.
The landmark 79-room hotel straddles some of the most high profile commercial property in Los Alamos at the convergence of Trinity and Central Avenue. But the overall economy and increased competition — both on and off the Hill — left the 40-year-old lodge struggling for survival.
The foreclosure documents were filed in First Judicial District court in Los Alamos County by LANB attorney James R. Jurgens.
The complaint listed the defendants as Hilltop House, LLC, a New Mexico limited liability company; Hilltop House Hotel, Inc., a New Mexico corporation; Ron Selvage and Kimberly Selvage; and the Hilltop House Spa, LLC, a New Mexico limited liability company. They were all listed under the same case number in district court.
Back in September 2005, managing partner Ron Selvage and Hilltop House LLC took out a mortgage of $4.8 million. Selvage had the backing of a team of local investors, who pooled their funds and came up with $600,000. And one of the bigger investors was local businessman Roger Waterman of TRK Management.
Selvage said the hotel’s financial troubles were traced to the economic downturn as well as a dwindling number of subcontractors working at the lab. Selvage also said it did not help that a new hotel opened for business just down the road in 2010.
According to the filing, Hilltop executed and delivered a promissory note to LANB in the original principal amount of $4,288,55,43 with interest and this was called the “60 Note.”
Hilltop, however, failed to make payments due on the 60 Note when it came due and on Sept. 25, LANB made a demand on Hilltop to cure the default under the 60 Note by Oct. 5. Selvage said the mortgage payment was $26,000 per month. According to the complaint, Hilltop failed to cure the default.