The 200-room Hotel Hot Springs & Spa is now in the hands of its creditor after foreclosure auction at the Garland County Courthouse on Wednesday.
SBN V FNBC LLC, an affiliate of Summit Investment Management LLC of Denver, an investment company that buys distressed loans, took control of the 14-story, 134,000-SF property after only one other group made a $200,000 bid.
The company will apply the $16 million value of the hotel against a $128.9 million judgment its owner, GRGCBHS LLC, received in June.
Developer Gary R. Gibbs of Niceville, Florida, agreed to the judgment and the foreclosure for his GRGCBHS LLC, in which he has an ownership interest. The judgment, one of the largest in Arkansas, was not against Gibbs personally since he is in Chapter 7 bankruptcy.
Gibbs wanted to make the hotel, which has been in receivership since October 2018, "the leading hotel in Hot Springs and he felt like he was on his way," one of his attorneys, Q. Byrum Hurst of Hot Springs, has told Arkansas Business.
The LLC purchased the former Austin Hotel, at 305 Malvern Ave., in 2015 for $10.15 million. The new owner renovated the property, which is connected to the convention center, for another $10 million, and it reopened as the Hotel Hot Springs in 2016.
Gibbs later fell into deep financial distress after the New Orleans bank that made the majority of his loans failed. SBN V FNBC paid the FDIC about $114 million for a pool of about $500 million of First NBC’s loans, and Gibbs and his companies’ loans were in that pool.
SBN V FNBC alleged in Gibbs’ bankruptcy filing that Gibbs mismanaged the Hot Springs properties and others he owned in Desha County and defaulted on the loans for the properties.
Gibbs has said he owns 45% of the LLC. The rest is owned by trusts in the names of his wife, two adult sons and his grandchildren.
