Historic Lower East Side Hotel Files For Bankruptcy
The hotel, at 100 Orchard St. near the Bowery, was built in an 1879 tenement building and is owned by Randy Settenbrino, who filed the petition for Chapter 11 protection in the U.S. Bankruptcy Court of the Southern District of New York Wednesday.
Settenbrino said in the filing the property has $11.2M in liabilities, but it has been unable to restructure its debts after seven years of turmoil. Settenbrino said the 143-year-old building is the prize asset of his family, but it first ran into trouble shortly after entering a 2015 lease agreement with Eli Idi.
“In May 2015, because of my personal family situation, with six young children and a mother who became terminally ill, I agreed to lease the Hotel to Eli Idi ... who I believed to be a reputable businessman," Settenbrino wrote in an affidavit filed with the bankruptcy petition. "It was a huge mistake.”
Idi opened a hostel on the premises, but wound up in court after Settenbrino sued Idi for failing to pay both rent and real estate taxes and letting the building fall into disrepair, he said in the affidavit, after which time Idi agreed to pay back taxes, rent arrears and legal fees.
However, Settenbrino alleges that Idi defaulted and left the building in March 2020 when the pandemic set in, and that he is responsible for more than $3.3M of the hotel’s debt. Settenbrino claims that he was saddled with the hotel’s debt when Idi sued him in June 2020, trying to execute an enforceable option on the lease to purchase the 1879 tenement property for $18M.
Settenbrino even attempted to enter into an agreement to use the hotel as a homeless shelter run by New York City — but he said after his lender, Eric Roth's Brick Moon Capital LLC, attempted to foreclose on the property during the state's commercial eviction and foreclosure moratorium, the deal was scuttled.
Brick Moon filed to foreclose again in January, Settenbrino wrote, and the New York State Supreme Court placed the property into receivership. In the bankruptcy filing, Settenbrino said the property is worth $21M, and it makes up the vast majority of the business's assets.
The Blue Moon Hotel’s financial struggles predate the pandemic and its most recent tenant. The Settenbrino family grappled with expensive renovations after deciding to open a hotel on the property in 2006. As recently as last April, the Blue Moon Hotel took its plea for survival to members of the public via a crowdfunding campaign that has raised just over $7,500 to date.
Other NYC hotels have also struggled amid the pandemic. In December 2020, Brooklyn’s famed Tillary Hotel also filed for bankruptcy as its owners worked to restructure millions in debt. Earlier this year, a string of Manhattan hotels sold for well below their pre-pandemic valuations, including the Times Square Sheraton.
CORRECTION, MARCH 24, 4:30 P.M. ET: A previous version of this article misstated the age of the building housing the Blue Moon Hotel, which was built in 1879 and is 143 years old. This article has been updated.