The Milwaukee Marriott files for Chapter 11 to avoid foreclosure

By Elias DaSilva | September 12, 2024.

The owner of the Marriott Hotel located in downtown Milwaukee, specifically at 625 N. Milwaukee St., with 205 rooms, has filed for bankruptcy protection, particularly under Chapter 11.

This filing allows the hotel to continue its operations while its owner, Wisconsin & Milwaukee Hotel LLC, restructures its financial obligations under the supervision of the bankruptcy court. Although the establishment is partially funded by public resources, it is still in operation.

According to documents and evidence presented to the U.S. Bankruptcy Court, Wisconsin & Milwaukee Hotel has both assets and liabilities estimated between $10 million and $50 million.

Among the company’s creditors is the Wisconsin Housing and Economic Development Authority, an entity that primarily supports housing financing and backs commercial projects using funds obtained from the sale of tax-exempt bonds to private investors and through federal tax credit allocations.

According to the file, Wisconsin & Milwaukee Hotel owes the state entity $42.5 million, of which $16.1 million is unsecured. This situation suggests a possible debt forgiveness, subject to the restructuring of the hotel’s finances. The authority is the largest unsecured creditor.

The Marriott began operations in 2013 and was developed by Jackson Street Holdings LLC, led by Mark Flaherty and Ed Carow, who also manage two other downtown hotels: the Westin Milwaukee and SpringHill Suites.

Operationally, “The hotel is performing well, and the outlook for further improvements is promising,” Carow said in recent statements. “However, the existing loans have matured and require financial restructuring or refinancing to ensure the business’s future stability.”

The hotel industry is gradually recovering from the 2020 COVID-19 pandemic, and while The Trade, a 207-room Marriott Autograph hotel, recently opened downtown, some properties are still facing challenges.

Among them is the Cambria Hotel, located at 503-521 N. Plankinton Ave., which was sold in December through a foreclosure auction, and the Hampton Inn and Suites, located at 176 W. Wisconsin Ave., which was sold by its lender in October. The former remains open, while the Hampton has been closed since May.

The Marriott Hotel closed its doors in March 2020 due to the pandemic and did not reopen until the summer of 2021, long after other downtown hotels had resumed operations.