Superior Court Judge Arthur Barcinas suspended the foreclosure and plan to auction off the Pacific Star Resort & Spa and a gas plant in Agat.
The auction was supposed to take place today. The suspension lasts for 10 days.
Bank of Guam is seeking to foreclose on the assets of Guam Industrial Services Inc., Marianas Gas Corp. and Marianas Properties which does business as the Pacific Star Resort & Spa. The bank is alleging a default on a $32 million loan.
In addition to the hotel, at stake is a large dry dock called the Machinist which was sent to China for repairs but has been seized by a ship repair yard over a payment dispute, according to court documents.
As of October 2020, the balance on the loan was $30 million, but the market value of the hotel and the Agat properties under Marianas Gas is ”many millions of dollars higher than the balance of the loan claimed by the bank,” according to the borrowers.
Marianas Gas employs 34 people and is the sole provider of oxygen, nitrogen and medical gas for the island’s hospitals and clinics, the complaint states. Pacific Star has 61 employees.
The plaintiffs allege in court documents that the bank seized from its Bank of Guam account a $1.67 million payment by a vendor.
Marianas Properties requested that the bank release $300,000 of the $1.6 million to cover payroll, insurance, payments to vendors, tax and operation expense, to which the bank agreed.
The plaintiffs also allege the bank confiscated $750,000 and $550,000, respectively, including a portion of which was Marianas Properties’ pandemic relief from the U.S. Small Business Administration.
The bank effectively cut off Marianas Properties’ cash flow, the complaint states.