Historic Lower East Side hotel files for bankruptcy amid pandemic woes

Settenbrino then leased the hotel to businessman Eli Idi in May 2015, a Settenbrino move described in the filing as “a huge mistake”. Idi converted the building into a hostel and fell behind on property taxes and rent, and the building began to fall apart, according to Settenbrino. affidavit.

Idi then defaulted on an agreement to pay those back taxes and rent, abandoned the building when the pandemic hit in March 2020 and still owes Settenbrino’s company more than $3.3 million, according to court documents . He also sued Settenbrino later that year, claiming he had the right to buy the hotel for $18 million with a $2 million credit, preventing Settenbrino from selling the hotel or getting new funding, according to the affidavit.

Settenbrino reclaimed the hotel after Idi left and said it now had several maintenance issues, including a broken elevator, HVAC and fire suppression system in need of repairs, severe building damage water and a “close to collapsing” commercial kitchen floor. He worked with his family and community volunteers to renovate the hotel, which remained closed thanks to the pandemic until September 2021, the affidavit states.

A lawyer for Idi did not respond to a request for comment on the charges by press time.

While the hotel was closed, Settenbrino began negotiating with the nonprofit Not On My Watch to use the building as a homeless shelter, and the organization signed a letter of intent to lease the property in April 2020, according to the affidavit. However, that deal fell through after the hotel’s lender sought foreclosure on the property in September 2020, despite New York’s moratorium on commercial foreclosures that was still in effect at the time, according to court documents.

Despite these setbacks, Settenbrino strikes a more optimistic tone towards the end of the affidavit and indicates that he does not expect the bankruptcy filing to lead to the end of the Blue Moon Hotel. The company plans to file a reorganization plan to extend and modify its mortgage, and it expects its revenue to increase as the impact of the pandemic subsides and tourism increases. He notes that bookings have already increased with the end of mask mandates and describes the company’s core business as “fundamentally sound” and “improving every month”.

David Wander, a Tarter Krinsky & Drogin attorney representing the hotel, echoed the point and stressed that the hotel plans to emerge from bankruptcy with a solid path forward.

“The plan is to revitalize the business as New York rebounds from the pandemic and tourism returns,” he said. “They will increase occupancy, then room rates, and then we will negotiate with the lender to restructure the mortgage.”

Anne G. Cash