MacArthur Place owner declares bankruptcy

IMH Financial Corp, the owner of MacArthur Place Hotel and Spa, at 29 E. MacArthur St. in Sonoma, entered bankruptcy protection on July 23. If its reorganization plan is approved by the bankruptcy court, all of the assets of the hospitality investment firm will be turned over to its largest shareholder, JP Morgan Chase, according to filing documents.

Arizona-based IMH both owns and operates the MacArthur Place, a longtime Sonoma hotel fixture just off Broadway. In its chapter 11 bankruptcy filing, IMH lists the hotel as its only income-producing property on a corporate balance sheet that includes $129 million in debt. In the filing documents, IMH CEO Chadwick Parson describes MacArthur Place as his company’s “most important operating asset.”

In the filing documents, IMH management states that MacArthur Place “is not only heavily encumbered, but due to the relatively recent California wildfires and the continuing COVID-19 pandemic, has itself been in need of continual financial support which the Debtor, without this Chapter 11 filing, will be unable to provide in the future.“

But another senior executive at IMH was quick to assure the Index-Tribune he does not expect the bankruptcy filing to disrupt service at the hotel in any way.

“We do not anticipate that the property’s operations will be impacted by the filing. The property operates as its own separate entity, it is business as usual at MacArthur Place with our team seamlessly welcoming and servicing guests,” said Greg Hanss, EVP of Hospitality for IMH Financial, in an email.

MacArthur Place General Manager Rubén Cambero said his staff has been pleased by the reaction the hotel has gotten from guests and locals since reopening on July 1.

“There is a renewed energy here as we welcome guests back and provide them with a safe haven for their stay in Sonoma,” said Cambero. “Layla's outdoor dining options have been incredibly well received by locals and visitors alike. It's fantastic to see familiar faces again on property, we look forward to continuing to be a place for the community and our neighbors to enjoy."

IMH purchased the 6-acre hotel, restaurant and bar property at 29 E. MacArthur St. in late 2017 for $36 million from Suzanne Brangham and Bill Blum, according to the 2018 IMH annual report, after being on the market quietly for two years.

Two years later, the hospitality investment company launched a $25 million renovation of the property. The transformed resort now includes the restaurant Layla, a new bar, and a coffee bar and marketplace called Porch.

In the wake of IMH’s major reinvestment in the property, MacArthur Place has faced a difficult business environment. By way of explanation for the need to declare bankruptcy, in its Q&A for shareholders, IMH stated at the time of the filing: “Our two key assets (the MacArthur Place Hotel in Sonoma County, California, and the Rio West property in New Mexico) are not presently generating any revenue.”

MacArthurPlaceBankrupcyFiling.pdf

Contact Lorna at lorna.sheridan@sonomanews.com.