Two figures going through bankruptcy papers

Iron Horse Hotel Motors On Despite Bankruptcy

Earlier this summer, Milwaukee’s popular Iron Horse Hotel filed for Chapter 11 bankruptcy. The much-lauded, motorcycle-themed lodge plans to stay open while its case proceeds, which is not unusual and is probably a good thing for the Walker’s Point neighborhood. 

Although Hanson & Payne is not involved in the case, it is one we are keeping an eye on since the hotel is a well-known Wisconsin business, and Chapter 11 filings give you a glimpse behind the curtain. 

Why The Iron Horse Hotel Filed for Bankruptcy

The Iron Horse has been welcoming guests at its Florida Street location, just across the bridge from the Harley-Davidson Museum, since 2008. The former Coakley Bros. Inc. warehouse has around 100 guest rooms, two banquet facilities and two restaurants. 

According to court filings, the hotel is valued around $28 million. Its largest debt is to its mortgage lender, which has attempted to foreclose on the property. Other creditors include a neighboring apartment complex which provides parking to the hotel, professional services firms, food and beverage suppliers, local construction companies, and the Small Business Administration’s Covid-19 Economic Injury Disaster Loan (EIDL) program.

Some of these debts, and the hotel’s legal and financial issues in general, appear to date back several years. However, hotel management is emphasizing the impact the COVID-19 pandemic has had on the establishment, and the rebound it has made. Ownership is adamant that the Chapter 11 process will allow the hotel to get back on its feet. 

Chapter 11 Provides A Path Forward 

Under Chapter 11, a business may renegotiate debts, terminate certain contracts, sell off assets, and downsize or shut down portions of its business while continuing to operate. This flexibility is designed to help struggling businesses turn things around and get back on track, and that is what the owners of the Iron Horse intend for it to do.

The hotel’s creditors have an incentive to work out an agreement and find a way to move forward because the alternative is seeing the debtor convert the bankruptcy from Chapter 11 to Chapter 7 and wind down operations. In that scenario, creditors are less likely to get repaid any of the debts they are owed, or may only get pennies on the dollar. 

Such conversions are not unusual. Many businesses that file under Chapter 11 and continue to struggle, even after taking advantage of the benefits that the bankruptcy law provides, end up converting to Chapter 7 and shutting down.

The Hanson & Payne team will be watching to see what happens in this case, particularly if the Milwaukee Economic Development Corp. gets involved. 

Milwaukee Bankruptcy Lawyers You Can Trust

Bankruptcy opens new opportunities and can allow a company on the edge to survive and thrive. The business-minded legal team at Hanson & Payne has helped countless business owners and commercial lenders in the Milwaukee area navigate the bankruptcy system. If you are looking for legal counsel in this challenging time, we would be honored to take your call. Contact us today to schedule an initial consultation.