BLOOMINGTON — The Chateau Hotel and Conference Center in Bloomington is under new ownership after a judge agreed to enter a foreclosure judgment.
At a hearing Wednesday in McLean County Circuit Court, Judge Paul Lawrence granted SDO Fund II's request to foreclose its commercial mortgage for the hotel and conference center located at 1601 Jumer Drive.
"The judge agreed to grant our request for a judgment of foreclosure, which simply means our client is exercising its right to foreclose on a mortgage that it holds against the property," said SDO's attorney, Mary Corrigan, with the Howard & Howard law firm in Peoria. "Once that is entered we will have a judgment.
"The court also granted (SDO) possession, so we have a management company that is in the process of taking over operations of the hotel," she added. "We expect a seamless transition and hopefully a better value to the community."
The hotel remains open and operating, so no guests or scheduled events are being impacted by the change.
The adjoining Tony Roma's restaurant is operated separately from the hotel and is not part of the foreclosure judgment.
The new ownership assigned Hostmark Hospitality Group of Schaumburg as the management company, as of Wednesday.
“We are pleased to play a vital role in ensuring that this impressive property remains a vibrant member of the Bloomington community, providing management stability, employment opportunity and exceptional accommodation for leisure, business and group clientele,” said Jerome F. Cataldo, Hostmark's president and CEO, in an emailed statement.
"We know that the Chateau has been a landmark in the community for many years," he added. "We look forward to assisting the new owners in bringing back the Chateau to its original prominence."
Christopher Cox, an attorney who represented the property owners in the case until September, declined to comment.
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The hotel's former owners, Bloomington Chateau Partners LLC and Platinum Hospitality Group LLC, have faced foreclosure and sale of the property since they failed to make any mortgage payments through September 2016.
At that time, Bloomington Chateau Partners was $8.3 million in debt, including $8.1 million owed to Wachovia Bank Commercial Mortgage Trust.
SDO, a Florida limited liability company, purchased the debt on the property in December 2016, and took over the foreclosure action.
In a court motion requesting a summary judgment of foreclosure, SDO's attorneys alleged the parties entered into a standstill agreement on Sept. 23, 2017, which the property owners subsequently violated. The parties then entered into another standstill agreement on Dec. 31, 2017, which the property owners again violated, according to court documents.
Under a standstill agreement, a lender typically makes no further collection efforts on an unpaid loan, acting in the belief that foreclosure would jeopardize the ability of a borrower in financial difficulty to repay any portion of the debt.
Despite the existence of the standstill agreement, the property owners failed to pay real estate taxes, SDO alleged in its court complaint.
The delinquent real estate taxes were subsequently sold to a tax buyer. After obtaining an estimate from the McLean County treasurer, SDO, through its attorneys' trust account, paid $292,279 in delinquent real estate taxes on Aug. 19. But SDO is seeking a $38,656 refund because of an overpayment to redeem the delinquent taxes.
Bloomington Chateau Partners purchased the five-story, 180-room hotel in 2002, about 14 years after it opened as Jumer's Chateau and three years after the Jumer's chain filed Chapter 11 bankruptcy.
Over the course of a repayment agreement since 2014, Bloomington Chateau Partners has paid the city $307,058, but a tax lien remains on the property for the remaining amount owed related to interest and penalties on those payments, said city attorney Jeff Jurgens.