A U.S. District Court has ordered a default judgment against the owners of the hotel at 521 Greenfield Road, once a Holiday Inn franchise and now The Inn at Lancaster.
The action against Portfolio-Lancaster LLC, a subsidiary of Kronos Hotels and Resorts, is one of three pending foreclosures ordered by the U.S. District Court for the Eastern District of Pennsylvania April 3.
The other two properties are in York and Greentree (southwest of Pittsburgh).
The Inn at Lancaster, one of 16 properties acquired by Georgia-based Kronos for $65 million in June 2007, experienced a litany of problems before going into court-ordered receivership last December.
These included bounced employee paychecks, utility shutoffs for nonpayment of bills, state and county tax liens, a state health department-ordered restaurant shutdown, charges of illegal alcohol sales and, ultimately, revocation of its Holiday Inn franchise tag.
The remaining hotels bought in the 2007 deal are all in receivership due to loan payment defaults.
Despite the recent foreclosure action, the Inn at Lancaster plans to reopen its restaurant and lounge.
State health officials ordered the restaurant closed last October after documenting 67 code violations during an inspection of the kitchen and dining areas.
That same month, state Liquor Control officers charged Kronos CEO Charles Morais and then-general manager Jay Sharma with selling alcohol without a license.
The hotel's liquor license had expired in February 2008 and Kronos failed to re-apply for one after acquiring the property. In a January 2009 hearing, Magisterial District Judge Denise Commins affirmed the merits of the state's case and remanded the matter to the county's Court of Common Pleas.
According to state Agriculture Department spokesman Chris Ryder, The Inn at Lancaster has submitted a plan outlining measures taken to remedy violations. Ryder said the hotel may not reopen until the state approves its plan and it passes an on-site inspection.
State Liquor Control Board spokesman Francesca Chapman said the hotel wants to resume selling alcohol and is seeking a "newly created license," which the board can issue to hotels with 30 or more rooms.
She said the license has not yet been approved.
According to sources, the hotel, whose workforce has dropped to fewer than 10 people and has been hosting few guests, hoped to open the restaurant and lounge by mid-May.
As part of the 2008 receivership stipulations, Prism Hotels and Resorts of Dallas was brought in to manage the facility.
In December, Prism vice president Al Whitehouse said his firm planned to restore the hotel and operate it on a long-term basis.
"I have nothing to report right now," [regarding future plans] Whitehouse said. "The receiver and lender are working to resolve the situation."
He said Prism is "exploring" a possible franchise affiliation but said he didn't know if any announcement would be made soon.
Whitehouse also said that Prism hasn't renovated the hotel because "that process will depend on the franchise affiliation."
Asked if renovations would begin in the near future, he said, "I don't know."
Chip Smedley is a staff writer for the Sunday News. E-mail him at csmedley@lnpnews.com. 