LAS VEGAS (CN) – Lehman Brothers hobbled development of an “upscale boutique hotel” near the Las Vegas Strip when it stopped making payments on a $66 million loan it had approved before it filed for bankruptcy, the project’s developer says. A/P Hotel also claims Lehman Brothers tried to foreclose on the property through false accusations that A/P had defaulted.
In its complaint in Clark County Court, A/P says it secured a loan from Lehman Brothers in September 2007 to buy the Atrium Suites Las Vegas and turn it into the Paradise Boutique Hotel.
Lehman Brothers agreed to distribute funds within 10 days upon request as long as A/P paid interest on the total loan balance each month, according to the complaint.
Lehman Brothers filed for Chapter 11 in September 2008. A/P sent a letter requesting a $1.3 million disbursement later that month, and says it never received the money. Construction stopped.
Lehman Brothers sent a notice of default in June this year, telling A/P that it was proceeding with a nonjudicial foreclosure because A/P had failed to pay interest since November 2008.A/P wants to stop the foreclosure process. It is represented by Eric Olsen.