New hotel owner files for creditor protection
Homburg Invest Inc., owner of Charlottetown's new Holman Grand Hotel has filed for creditor protection.
The Toronto Stock Exchange suspended trading of Homburg Invest Inc. shares on Monday. The TSX is reviewing the real estate firm after it filed for creditor protection on Friday.
"The purpose of the application is to allow us to restructure our activities in an orderly fashion in the best long-term interests of the company and all of its stakeholders," said Homburg Invest Inc.'s chairman of the board Hartmut Fromm in a statement.
A company seeks creditor protection when it's deeply in debt. This gives it time to try to work out its financial difficulties with its creditors. It's also a way for a company to avoid bankruptcy.
A different company called Homburg Canada Real Estate Investment Trust also owns properties in Charlottetown including three business towers and the Confederation Court Mall.
Homburg Canada REIT owns a management company called Dyne Holdings. In 2008, the province of P.E.I. loaned Dyne Holdings $30 million.
A Dyne spokesperson said that loan isn't related to the Homburg Invest Inc. situation.
Prince Edward Island's Innovation Minister Allan Campbell said Islanders have nothing to worry about.
"We're dealing with a number of companies that, you know, are solvent. We've been informed it's business as usual and I can tell you our loans are well secured and they are up to date," said Campbell.
But if Homburg Invest Inc. doesn't emerge from creditor protection, it may have to sell assets to pay off some of its debt.