The owner of Brooklyn’s Tillary Hotel, the boutique lodging property that briefly became a homeless shelter after being shuttered by the pandemic, has filed for bankruptcy.
The firm, 85 Flatbush RHO Mezz LLC, plans to convert the residential portion of the downtown 174-room hotel and 64-unit luxury apartment building into condominiums, according to court papers. The Chapter 11petition filed Friday in the Southern District of New York listed assets and liabilities of $50 million to $100 million.
The Tillary, whichbills itself as the exemplification of the borough’s cool factor, has struggled since the Covid-19 outbreak forced management to close its doors in March, according to the filing. It reopened on May 15 to provide shelter to homeless people until June 30, before reopening to the general public of July 15.
Occupancy remains depressed because of the pandemic and the hotel’s parent is unable to keep up with its debts due to a “substantially reduced” occupancy rate. Its secured lender gave notice that it intended to force a sale of its assets, according to the filing.
With many properties already shuttered for nearly a year, distressed-debt investors and restructuring specialists expect that 2021 will lead to ashakeout of the travel and hospitality industry. Lenders are running out of patience and hotels are running out of time, with the rollout of vaccines likely to take months and a return to some measure of pre-Covid travel not expected until the second half of next year.
— With assistance by Jeremy Hill
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