In the hopes that a convention center expansion will act as a rising tide to lift all boats, Monroe County officials are considering mooring themselves to Sun Development and Management Corp. with a $72 million proposal for downtown development.
Sun Development’s proposed anchor hotel may be the Indianapolis-based company’s first introduction to the Bloomington market, but it’s just one in a long line of more than 60 properties handled by CEO Bharat Patel. Founded in 1989, Sun Development is closing in on a 50-property portfolio spanning a 14-state footprint. The company’s Midwestern growth hasn’t been without choppy waters, but so far, Patel has weathered each storm.
One particularly treacherous period came in 2013, when National Republic Bank of Chicago sought to cash in all of its outstanding loans with Patel.
“The moral of the story was they gave us less than five weeks to pay off $118 million in loans,” Patel said. “They knew this is the guy that could possibly go to Wall Street and get it.”
The company was forced to file Chapter 11 bankruptcy to protect seven of its 17 hotels, according to Patel. Those hotels were new, and therefore vulnerable, since they’d all been built since 2007. Some were only a few months old.
“It was a combination of timing, opening seven new hotels and banks having issues with having portfolios full of hotel loans,” Patel said. “We had to protect our brand new hotels.”
Patel said he eventually repaid all loans to the Federal Deposit Insurance Corp. as National Republic Bank closed in 2014. Although the general perception of bankruptcy may be negative, Pamela Foohey, an associate professor at Indiana University’s Maurer School of Law, said Sun Development’s bankruptcy filing wasn’t an issue.
“The outcome — from the delinquencies, to the ultimate closure of National Republic (Bank), to the fact that Sun Development filed a number of its subsidiaries under Chapter 11 — is best explained as a function of the Great Recession,” Foohey said.
Foohey noted after reading the 2013 bankruptcy filing that both National Republic Bank and Patel lent money to the hotel, but National Republic’s loan was secured and therefore more likely to be fully or partially repaid. Patel risked more on the investment, since his loan wasn’t secured. Foohey said Patel’s actions were a “good-faith attempt to make the hotel work,” and that many owners put their money at risk to try and save a venture.