Pacific Star owes $4.9 million in taxes, hotel sale arguments set for New Year’s Eve | News

Pacific Star Resort and Spa owes about $4.9 million in taxes, according to an operating report filed in the ongoing Tumon hotel bankruptcy case.

Marianas Properties, doing business as Pacific Star, filed for bankruptcy Sept. 12, hours before Bank of Guam was set to auction off the hotel due to an unpaid loan.

The parties will appear before Guam District Court Chief Judge Frances Tydingco-Gatewood on New Year’s Eve to discuss whether foreclosure proceedings should proceed.

The liability statement filed in federal court lists $2.8 million in gross receipts taxes and $2.1 million in hotel occupancy taxes owed to the government as of Oct. 31, as well as an outstanding accounts payable balance in the amount of 2.4 million dollars.

In addition to the $28.6 million balance on the Bank of Guam hotel loan, which accrues $8,348.53 in interest each day, Pacific Star also has another $14.5 million in unsecured debt, according to the operating report.

The hotel posted a loss of $227,733 for October, with its only income coming from $13,776 worth of merchandise sold, an operating report seen in court shows.

The company reports $171,225.81 held in various bank accounts.

Pacific Star has not operated on a regular basis since the COVID-19 pandemic struck in 2020 and only operated briefly as a government-contracted quarantine hotel.

The company’s October operating report listed only about $9.65 million in assets, but Pacific Star’s actual value is at issue in ongoing bankruptcy proceedings.

Pacific Star is doing its own appraisal and says the hotel is worth more than the Bank of Guam loan balance.

The bank’s lawyers are reluctant to publicly disclose their valuation and argue that the hotel’s value is falling.

The Bank of Guam wants the court to allow a foreclosure auction on the property due to an alleged decline in value.

But attorneys for the hotel argue that the foreclosure auction will result in the hotel being sold for less than it’s worth and will prevent Pacific Star from paying off other debtors.

The Bank of Guam and the hotel were scheduled to appear in court Nov. 22 to discuss the matter, but the bank and hotel agreed to reschedule the date to Dec. 31 while settlement negotiations continued, according to a notice filed by Pacific Star’s attorneys. .

Attorneys for Bank of Guam said Micronesia Mall owner Goodwind Development Corp. may want to buy the hotel property.

In October, Goodwind’s lawyers filed a notice to appear in the bankruptcy case, saying Goodwind was an interested party in the case.

In the meantime, the hotel will take out a $1.5 million personal loan from company owner Matthews Pothen to pay employees and end the company’s bankruptcy case, documents filed in the District Court of Guam show.

Tydingco-Gatewood authorized the hotel to accept a loan to cover administrative costs associated with the bankruptcy proceedings.

The judge also allowed Pacific Star to hire attorney Menakshi Khemlani as legal counsel, hire financial advisers and approve the salaries of the 17 employees who continue to keep the hotel running.

A declaration filed by Pacific Star President Ajay Pothen on Sept. 11 indicated that the hotel planned to reopen in 2023 but suffered “substantial damage” from Typhoon Mawar.

Although the hotel estimated damages exceeding the typhoon insurance coverage limit of $25 million, its insurer estimated damages at $13 million.

As of September of this year, the company was still awaiting insurance payments needed to repair the facility, according to Pacific Daily News.