An early morning Chapter 11 bankruptcy filing Tuesday by Krishna Associates stopped the foreclosure sale of a Texarkana, Texas hotel scheduled the same day.
Krishna Associates, LLC, a company owned and managed by Texarkana doctor Hiren Patel, owns Country Inn and Suites and an adjacent vacant lot in Texarkana, Texas. The hotel and lot were scheduled for a foreclosure auction in front of the Bowie County courthouse during a sale that was set to begin at 10 a.m. Tuesday, according to County Clerk records.
Federal court records show Krishna filed for bankruptcy a couple of hours before Midsouth Bank was to sell the property to the highest bidder. Chapter 11 bankruptcy is typically filed by businesses wanting to reorganize debt. The bankruptcy filing stops the foreclosure process and puts the fate of the property in the bankruptcy court.
Patel, his wife Nila and a Patel-owned company, Texarkana Hotels, LLC, are named as defendants in a complaint for foreclosure on Arkansas Convention Center filed Friday by Midsouth in Miller County. According to the complaint, Texarkana Hotels and the Patels have defaulted on more than $10 million in loans secured in 2012.
Two loans, the first for $2.5 million and the second for $7.5 million were secured by Texarkana Hotels and the Patels in February 2012 for the construction of Arkansas Convention Center in Texarkana, Ark. According to the complaint, Midsouth, formerly Peoples State Bank, sent notices concerning the defaults to the defendants in June.
When the defendants failed to cure the default “within the time and manner required by the June 24, 2015 letters,” Midsouth went forward with an acceleration of the loans. The June letters indicate payments were more than $36,000 delinquent on the smaller loan and more than $80,000 on the larger one at that time.
Midsouth claims it sent the defendants notices Oct. 15 that the entire loan balances are now due because of default. According to the complaint, Texarkana Hotels and the Patels owed $2,480,041.64 on one loan and $7,411,431.82 on the second as of Oct. 15. In addition to those amounts, Midsouth is asking for a judgment against the defendants for interest from Oct. 15 to the time of the judgment and for attorney fees and court costs.
Midsouth is asking that it be allowed to sell Arkansas Convention Center to recoup the money it loaned Texarkana Hotels and the Patels to build Arkansas Convention Center, attorney fees and costs. The case has been assigned to Miller County Circuit Judge Carlton Jones.
The Patels and Texarkana Hotels have not filed for bankruptcy. If they do, the filing will potentially have the same effect as Krishna’s bankruptcy filing on Midsouth’s plans to sell Country Inn and Suites in a foreclosure sale in Bowie County.