PORT TOWNSEND — Clam Cannery owner Kevin Harris has until mid-July to stave off foreclosure of the property by Columbia Bank of Seattle.
“We are going to do some kind of announcement next week. As soon as I can comment, I will,” Harris said Thursday.
He said he plans to provide details early next week on his effort to avoid foreclosure by securing an investor.
U.S. Bankruptcy Court Judge Marc Barreca signed an order Tuesday stipulating that Harris must have “a firm commitment by an investor to make a cash investment in the property in an amount sufficient to pay the secured claim of Columbia [$1.39 million] in full” by July 13.
While the bank claims Harris owes it more money, the
$1.39 million figure is based on the appraised value of the property.
Columbia Bank had asked the court to allow it to proceed with a foreclosure sale of the historic building at 111 Quincy St.
If Harris doesn’t find an investor by July 13, the bank can ask the court for a final order allowing it to proceed with a trustee’s sale.
The bank could set a trustee’s sale, but no sooner than Aug. 19.
Harris said he continues to operate the Clam Cannery Building as a five-room hotel.
But he said he suspects some potential customers have been discouraged by media reports about the bankruptcy proceedings.
“It makes it hard for us to take care of our clients and guests,” he said.
The Clam Cannery website lists availability of rooms and special event space.
The weddings and special event space on the main floor is booked every weekend from July 30 to Oct. 2.
Guests can rent the entire building, comprising four upstairs suites and the downstairs meeting room, so many of the same weekends are also booked.
Individual rooms have also been rented out, with bookings stretching into January.
The bankruptcy and foreclosure uncertainty dates back to December, when Harris filed for bankruptcy one day before the building was to go on the auction block.
Harris had not met a series of deadlines to make balloon payments to Columbia Bank and its predecessor, American Marine Bank.
Columbia Bank assumed the assets and liabilities of American Marine Bank when the latter was closed by federal banking regulators.
The federal bankruptcy court in Seattle has set a hearing for July 22 to review Harris’ efforts to find a firm investor.
If he does have an investor by the July 13 deadline, the court could rule that Columbia Bank cannot proceed with foreclosure.
If he doesn’t, the bank could set a trustee’s sale, but no sooner than August.
Columbia Bank may still raise objections to Harris even if he has an investor.
Harris has been restoring the historic building since 2002, when he initially planned to use part of the building to house his software development company, Real Solutions/Macrosystems LLC, and later planned to sell the additional rooms as condominiums.
He changed his plans again to convert its use to that of a hotel and set about renovating the upper floor and securing city approval.
Harris, through his company Quincy Street at the Waterfront LLC, also has ongoing litigation against the bank regarding its alleged interference in Harris’ business decisions.
The suit against American Marine Bank (succeeded by Columbia Bank when it took over the failed bank) claims that the bank refused to allow Harris to sell condominium units and required him to convert the building’s use to a hotel as a condition of a loan extension.
The suit also alleges that the bank meddled in other business decisions that caused Harris’ company to suffer additional costs and losses.
No action has commenced on that lawsuit since March, and no hearing date is set at this time.
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Philip L. Watness is a freelance writer and photographer living in Port Townsend. He can be reached at whatnews@olypen.com.