Bankruptcy Filing Blocks Historic Lenox Mansion Foreclosure Auction | New
LENOX – The historic Kemble Inn, a downtown landmark in the Golden Age built in 1881 as a seasonal home, has filed for bankruptcy with the United States Bankruptcy Court, District of Massachusetts, Worcester.
Legal action on Monday by owner Scott Shortt’s company, Frederick LLC, cancels a foreclosure auction for the property previously scheduled for Wednesday.
Shared Estates Asset Fund, a real estate syndicate that uses crowdfunding to buy historic Berkshire estates and mansions and market them as short-term vacation rentals, has offered to buy the Kemble Inn for $ 3.2million of dollars.
Bankruptcy judge Elizabeth Katz has scheduled an emergency hearing on the case for Thursday at 10 a.m., which will be held by telephone.
The two-storey property was built for Frederick Frelinghuysen, Secretary of State under President Chester A. Arthur.
According to court documents, the mansion suffered an operating loss of $ 104,000 on gross revenues of $ 921,384 in 2019. Last year, during the COVID-19 pandemic, revenues fell to $ 127,000 , creating a loss of $ 245,000. For the first half of this year, a small profit of $ 24,000 is recorded, based on revenue of $ 129,000.
Shortt’s attorney, Andrea O’Connor, of the Fitzgerald law firm in East Longmeadow, told the court that the inn’s bankruptcy filing resulted from “insufficient cash flow and the availability of credit to continue its business. current operations ”.
The financial setbacks “have been exacerbated by the pandemic,” O’Connor said. As a result, the company defaulted on its mortgage with Adams Community Bank, which transferred the loan to MA Opportunity Investments LLC in April. This month, that company scheduled the now-canceled foreclosure auction.
The court record lists the inn’s assets at $ 3,316,000, including real estate and furniture, as well as $ 116,000 in cash.
Frederick LLC owes $ 2.6 million on its mortgage, $ 450,000 to the US Small Business Administration and $ 91,000 to American Express.
At the emergency hearing on Thursday, the bankruptcy court will rule on Shortt’s request for temporary cash collateral, based on the value of the property, to pay for goods and services needed to run the hostel and its restaurant, table 6, for guests who are scheduled to arrive. Friday for the bank holiday weekend.
Shared Estates Assets Fund has a buy and sell agreement for the hostel. Fund founder and managing director Daniel Dus told The Eagle last week he could not disclose the funding arrangements for the Inn purchase, pending filings with the Securities and Exchange Commission , whether crowdfunding will be used.
Dus used investor funding for his two previous projects, The Playhouse at Foxhollow to Lee, which he sold last November for $ 1.3 million, after a six-year renovation, and for The Freeman Berkshires in Egremont. . This estate is now under restoration following the purchase of $ 1.6 million of Dus based on vendor financing and $ 890,000 from 141 investors who own an interest in the property and will be able to rent rooms there. with a 15 to 20% discount.
To finance the acquisition of Kemble Inn, Dus predicted “a minority of banknotes” to help offset ownership costs and “optimize returns for our investors” as interest rates are at historically low levels. He also cited a 90-120 day “due diligence” period to inspect and review the property and assess the cost of renovations to the inn, which has nine rooms.