A manager of the Chicago South Loop Hotel has filed for Chapter 11 bankruptcy, though its loan servicer is calling for the dismissal of the filing, claiming it was made in bad faith to keep the property from falling into the hands of a receiver.

A lawyer representing hotel manager Todd Hansen of Chicago South Loop Owner LLC filed for bankruptcy on the 11 West 26th St. property on Feb. 27, according to court records. The bankruptcy filing came five months after the hotel’s loan servicer, Rialto Capital Advisors, initiated foreclosure proceedings for alleged nonpayment on a $6.8M commercial mortgage-backed securities loan that was set to mature in 2028, The Real Deal reported.

Rialto's attorneys are now asking the court to dismiss the bankruptcy petition, TRD reports, claiming the filing was made hours after months-long negotiations between the hotel and loan servicer led to an agreement on a property receiver.

The motion paints the maneuver as a ploy to avoid receivership and further alleges the bankruptcy filing was made without proper corporate authorization and that the hotel was in no position to outline a reorganization plan in conjunction with the bankruptcy.

The 232-room hotel was completed in 2007 for an estimated $20M, according to general contractor Burling Builders.

Several Chicago hotels have fallen into serious distress over the past six months. The 228-room Hotel Felix in River North was snapped up at auction by Monarch Alternative Capital in October for just $29M, or roughly two-thirds of the loan's $44.7M balance, Crain's Chicago Business reported.

CORRECTION, MARCH 23, 5:50 P.M CT: This story has been updated to clarify which party associated with Chicago South Loop Hotel LLC initiated bankruptcy proceedings.