Randy Settenbrino hopes bankruptcy only happens once in a Blue Moon. Unfortunately, it happened this week.
Settenbrino, the owner of the Blue Moon Hotel on the Lower East Side, filed for Chapter 11 on Wednesday, Bisnow reported. The property, at 100 Orchard Street, has accumulated $11.2 million in liabilities, according to the filing.
In the filing, Settenbrino detailed several sordid years for the property, beginning with a 2015 rental agreement with El Idi that was entered into due to a personal family situation. The lease was a “huge mistake,” according to the filing, because Idi opened an inn on the property.
Not only that, but Idi failed to pay rent and property taxes and let the property fall into disrepair, according to a lawsuit filed by Settenbrino, Bisnow reported. The two sides reached an agreement, but Idi reportedly defaulted and left at the start of the pandemic, still owing more than $3.3 million, according to Settenbrino.
Idi then sued Settenbrino months later for a lease-to-own option.
Settenbrino also attempted to use the hotel as a homeless shelter in New York City. That plan, however, fell apart after lender Brick Moon Capital attempted to seize the property, according to Bisnow.
According to Settenbrino, the Blue Moon property went into receivership after Brick Moon made another foreclosure attempt in January 2021. The asset is believed to be worth $21 million.
Settenbrino opened the Blue Moon Hotel in 2006 after expensive renovations and has been trying to straighten out its finances ever since. In 2014, the property was listed for $19 million with YGNY Realty. Last year, the company took to GoFundMe, where it has since raised just over $7,500.
The Blue Moon Hotel may be in decline, but according to Crain’s, Settenbrino noted in his affidavit that he did not expect the bankruptcy filing spell the end of the establishment.
The pandemic has thrown the hospitality industry into dire straits. This month, Host Hotels & Resorts agreed to sell the Sheraton New York Times Square for $356 million, down $382 million from 2006.
[Bisnow] —Holden Walter-Warner