Embattled Vermont Hotel Lacked Workers’ Compensation Insurance

June 23, 2008

The Cortina Inn in Killington, Vermont, which closed two months ago after being linked to Legionnaires’ disease, has filed for bankruptcy.

But a bankruptcy court judge in Connecticut dismissed the inn’s case after learning the hotel had failed to maintain worker’s compensation insurance.

Although the hotel’s options are unclear, the Chapter 11 bankruptcy filings on May 28 show the inn owed more than $8 million as of Feb. 1 to GE Commercial Mortgage Corp.

Owner John Kerr also owes 167 unsecured debtors including individuals, companies, municipalities and state agencies.

Among them are WSI Environmental Services in Wallingford which is owed $50,500; Ultramar in North Clarendon which is owed $47,355; and the city of Rutland which is owed $37,326 in unpaid sewer fees.

Neither Kerr nor the inn’s lawyers could be reached for comment.

The inn was ordered to close again this week after follow-up tests detected Legionnaires disease bacteria in its water.

The inn closed voluntarily in April after confirmation of the bacteria in its water system and three confirmed cases of the disease linked to it.

There have been no new cases of the disease since then.

In Rutland Superior Court, GE Commercial Mortgage is seeking the foreclosure of the property and to have another party assigned to operate the hotel.

“Current financial statements for La Cortina, Inc., show that the company has payables in excess of $280,000 and accrued liabilities of approximately $376,000,” according to an affidavit by Chris Brown, senior vice president of LNR Partners, Inc., the firm managing GECMC. “Outstanding payables for a hotel of this size are typically $40,000 to $60,000.”

The hotel’s revenues have declined “significantly” from $4.1 million in 2006 to $2.6 million in 2007, Brown also wrote.

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Information from: Rutland Herald, http://www.rutlandherald.com/

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