The Westin Lombard Yorktown Center Bankruptcy Announced Amid Heavy Debt

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Westin Hotel in Lombard, Illinois Files for Chapter 11 Bankruptcy

The owner of The Westin Lombard Yorktown Center has filed for Chapter 11 bankruptcy protection as it struggles with a heavy debt burden. The hotel, in the Village of Lombard, Illinois, is funded and owned by Lombard Public Facilities Corp., which is an agency created by the municipal government to finance and build the hotel.

The construction of the hotel was financed by bonds. The owner took on a lot of debt in order to build the 18-story hotel and its related infrastructure.

The hotel opened its doors in 2007,  but the ensuing recession caused a major blow to the hotel’s business in its initial years. The corporation’s revenue projections failed to materialize, which left the hotel with a heavy debt load and not enough money to service that debt.

Since December 2011, the corporation has sought the village’s help twice every year by submitting requests for financial assistance. Each time, however, the village representatives voted to not use taxpayers’ money to help pay for the hotel’s budget shortfall.

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The hotel’s deteriorating financial condition ultimately raised questions about the financial health of the village, which was being pressured to bail out its biggest infrastructure project. Consequently, the village saw its credit rating drop from AAA to B.

On July 25, however, the village voted to approve a one-time $3.0 million payment to the hotel’s owner. That funding, however, will be utilized to improve the hotel—including upgrading its guest rooms and public areas—not to pay off its debt.

Following this funding announcement, the Village of Lombard’s manager, Scott Niehaus, said “The village’s interest is in making sure that the hotel and conference center has an opportunity to thrive and remain viable, especially in a day and age when traditional retail, bricks and mortar shopping centers are under siege.”

The hotel’s owners now hope to restructure its $246.6 million worth of outstanding debt (owed to bondholders) through the bankruptcy process. Management says that the hotel will continue its usual operations through the bankruptcy proceedings.

 

Sources

Lombard Westin filing bankruptcy to restructure $246.6 million debt,” Daily Herald, July 31, 2017.

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Categories: Bankruptcies, News

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