The owners of the recently reopened Crowne Plaza Hotel in Times Square filed for Chapter 11 bankruptcy protection Wednesday in an effort to resuscitate the ailing and lawsuit-plagued business.
Andrew Penson’s Argent Ventures wants to reorganize the finances of the hotel’s home, 1601 Broadway, having gained control of the 46-story tower in the heart of Times Square by vanquishing office giant SL Green in court and replacing Vornado Realty Trust.
Penson had elbowed his way into the marquee property by buying — at a steep discount — the mezzanine debt on which Vornado had defaulted.
The debt is $526 million on the 795-room hotel, 196,300 square feet of office space and 17,800 square feet of retail, according to bankruptcy filings. Almost all of that — $519 million — is owed to senior and mezzanine lenders. Some $418 million in senior debt has been delinquent since April 2020, according to bankruptcy filings.
The hotel, which occupies floors 15 through 46, closed the previous month when Covid arrived. It reopened last month. While tourism to New York City has rebounded substantially, the pandemic’s effects linger in the hospitality industry, which still employs fewer people than it did in 2019.
Some 88,000 square feet, or 45 percent, of the office space at 1601 Broadway remains vacant. The hotel paid $7.5 million in severance to laid-off hotel workers, plus another $5.2 million in severance which Argent, Vornado and hotel operator Highgate Hotels agreed to divide evenly.
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Besides the pandemic, Argent blamed the financial woes on a “burdensome” licensing agreement with InterContinental Hotels Group for use of its Crowne Plaza brand, and on a complex ownership structure. There are three fee owners, one of which also owns the leasehold.
In its bankruptcy filing, Argent said “the operating costs associated with servicing meeting spaces and providing food and beverage exceeded the revenues from such activities.”
It added that “the complex ownership arrangements of the land underlying the premises (namely the Walber fee parcel and the Riese fee parcel) also created uncertainty and financial strain.”
The Walber family had sold its ownership stake to office landlord SL Green in August 2021 for $121 million, but a judge ruled that the sale violated Argent’s ownership right to the property. Argent then bought the Walber family’s portion of the property — an 11,000-square-foot parcel — for the same $121 million in May.
The legal battle with SL Green was “expensive, time consuming and made it difficult, if not impossible, to reopen the hotel,” the bankruptcy filing said.
Argent bought the final fee parcel beneath the hotel on Wednesday. Vornado, the ultimate equity owner of the property, did not immediately return a request for comment.
Office tenants at 1601 Broadway include the Association for Computing Machinery, American Management Association and Open Jar Studios, with monthly rent totaling about $500,000. Retail rents, including Krispy Kreme’s, total about $635,000 per month.