by Sheldon S. Shafer, @sheldonshafer –
(Photo: By Michael Clevenger, The Courier-Journal)
With litigation pending, a potential buyer of the Galt House and possibly other large real estate holdings owned by the Al J. Schneider Co. is finding it difficult to secure title insurance needed to finance the purchase of the property.
The insurance is hard to come by because disposition of the property is muddled by the maze of litigation currently pending in Kentucky courts. It involves what seems to be a bitter dispute among the Schneider heirs, some of whom want to sell and cash out and others who don’t.
At the center of the fight are four daughters of the late Louisville hotel and real estate magnate who died in 2001. The Schneider family owns the Galt House and Crowne Plaza hotels and two large downtown office complexes.
The dispute pits daughters Mary Moseley, who heads the Al J. Schneider Co., and sister Dawn Hitron against their sisters Christe Coe and Nancy O’Hearn. The Schneider heirs, in all, number 21, including the daughters and grandchildren.
Attorneys for Moseley and Hitron told Jefferson Circuit Court last week that the Columbia Sussex hotel company, which had offered to buy the Galt House, couldn’t close on the transaction because, with the litigation in progress, it couldn’t obtain title insurance.
Rebecca Jennings, a lawyer for Moseley and Hitron, acknowledged in an interview that only one entity had reported an inability to get needed title insurance to acquire a Schneider property. But she said she anticipated that other potential buyers would confront a similar problem, especially anyone interested in acquiring the Crowne Plaza near the Kentucky Exposition Center and Louisville International Airport.
Jennings said it might be hard to sell any of the properties until the litigation is settled. She said her clients have asked the court to make some findings that might make it easier for potential buyers to get the necessary underwriting to finance a purchase.
Mark Grundy, an attorney for Coe, said Friday in an interview that, at this point, the family doesn’t have a sales contract for any of the properties and that there is no pending sale of the Galt House. “They need to have the litigation resolved to obtain title insurance to sell the properties,” he said.
He said, if what seems to be complicated litigation becomes protracted, it may be quite a while before any of the property can be sold.
Family members have said in court documents that they believe the primary Schneider Co. holdings are worth more than $280 million.
The flagship of the holdings is the Galt House Hotel & Suites, the complex on which officers in the entity that controls most of the vast Schneider Co. land has set a minimum sale price of $125 million. The 1,300-room overnight guest house with ample convention facilities towers over the downtown riverfront.
Court documents filed in the dispute indicate that a liquidation plan approved by the directors of the Al J. Schneider Co. some months ago sets these minimum prices on these Schneider-held properties:
• The Galt House (both east and west sides), $125 million.
• Embassy Suites on Fourth Street (company is limited partner), $90 million
• Crowne Plaza, fairgrounds/airport hotel at Phillips Lane and Watterson Expressway, $31 million
• One Riverfront Plaza tower (former BB&T tower), Fourth and Main streets, $16 million. It has 285,000 square feet of space.
• Waterfront Plaza, Main and Fourth streets, $20 million. It has 821,000 square feet of space and is the city’s largest office project.
The Courier-Journal reported recently that Northern Kentucky-based hotel chain Columbia Sussex was an interested purchaser of the Galt House. Attorneys confirmed that to the court this past week.
Among the issues being argued in the courts is whether a trust agreement permits the sale of the properties.
Moseley’s group controls the trust that – until May 31 – owns all the shares of the Schneider Co. After May 31, the shares could be divided among the 21 beneficiaries.
Coe and O’Hearn have asked the courts to strip managing power from company president and CEO Moseley, as well as from Hitron and two other co-trustees of the Schneider trust, which currently owns all the stock in the company. The other two are Michael Mountjoy, a CPA, and Joseph Mittel, former general manager of the Galt House. Coe is the fifth trustee.
Sisters Coe and O’Hearn argue that four of the five co-trustees of the Schneider trust want to “hastily and recklessly” liquidate real estate worth hundreds of millions of dollars.
Last spring, the trustees of the Schneider Co. agreed that “the market for hotel sales was at its historic peak and would likely deteriorate with anticipated changes in market conditions,” according to a filing.
In August, the liquidation plan was approved for the Schneider Co., but Coe did not vote on the matter.
Moseley in late March released a statement saying “there is a difference of opinion regarding the direction for the Al J. Schneider Co. The disparities will get resolved. It is business as usual for all of our entities.”
Some issues are pending before the Kentucky Court of Appeals, and others in Jefferson Circuit Court.
Reporter Sheldon S. Shafer can be reached at (502) 582-7089, or via email at [email protected].
