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The final chapter? Little Rock's Camelot Hotel files Chapter 11 bankruptcy.

When Mohan Mehta purchased downtown Little Rock's failing Camelot Hotel for $2.5 million on July 10, he also bought newspaper advertisements featuring himself and his wife in what they described as their "curtsy" to Little Rock.

On Jan. 23, Mehta filed for reorganization under Chapter 11 of the federal bankruptcy code.

Some Little Rock business leaders now wonder if the couple's curtsy may turn into a bow out of the city.

The 303-room Camelot has not been in the black since 1982. That was when Kinark Corp. of Tulsa, Okla., sold the hotel to U.S. Hotel Properties of California.

U.S. Hotel Properties could not pay off its loans, and Kinark was forced to take the white elephant back. In the six years Kinark spent trying to sell the hotel, it invested $1.5 million in the facility.

The city of Little Rock also has a vested interest in the Camelot. The hotel is attached to the city's Robinson Center and is an important part of Little Rock's efforts to lure conventions.

City officials gave Mehta 36 months to restore the hotel. They suggested that $2.3 million be spent to refurbish the Camelot, which still looks like it is straight out of the 1970s.

A progress report to the Little Rock Advertising and Promotion Commission last fall said that since Mehta purchased the Camelot, new carpeting and wallpaper have been installed in corridors and the lobby. The main staircase also has been redecorated, and there are new chairs in the dining, banquet and lounge areas.

Mehta vowed he would spend whatever it took to update the hotel.

In July, he told Arkansas Business, "It will be a challenge, of course, but I'm very confident."

Has confidence turned to despair eight months later?

Even though Mehta is facing occupancy rates that are down significantly from a year ago, he still exudes confidence.

"During these three or four months, we had to bite the bullet," Mehta says of what proved to be a lean winter. "|But~ the efforts you make today are not necessarily reflected tomorrow."

If his efforts aren't reflected soon, though, city and Kinark officials will have some tough decisions to make.

"We do not anticipate getting back in," says Bruce Lancaster, Kinark's controller.

But he won't say how long the company will give Mehta, either.

Kinark operates galvanizing plants in several states. It also owns a chemical storage facility and a chemical packaging plant.

It badly wants out of the hotel business.

Kinark sold its Tulsa Camelot Hotel to Radha Narumanchi, a friend of Mehta's. That facility never achieved the occupancy rates the Little Rock location did in its heyday, but it's not in bankruptcy now.

Lancaster cites the loss of flight crews from Southwest Airlines Co. as having contributed to the Little Rock hotel's problems. Southwest crews had been staying at the hotel since February 1984, but the airline has switched to the newer Excelsior Hotel down the street.

Debt Restructuring

Mehta claims it is only a matter of reaching an understanding with his creditors.

According to a statement Kinark released following the bankruptcy filing, the company "carries a $1.2 million second-mortgage promissory note from Mehta and is a guarantor of a $649,000 first mortgage previously assumed by Mehta."

If Mehta continues to pay off the first mortgage at the current rate, the debt will be retired by September 1993.

But Mehta says he needs the loan restructured due to poor cash flow at the Camelot. He's now working with officers of Little Rock's Worthen National Bank of Arkansas on a possible restructuring plan.

Mehta won't say when he expects to have his debts restructured.

Even when Mehta first came to the hotel, he was loath to say what his plans were. He doesn't want anyone, especially city officials, to hold him to speculation.

He wants that 36-month grace period if he needs it.

Mohan Mehta has revived hotels before.

He has owned the 132-room Holiday Inn at Brookhaven, Miss., since 1990. He invested almost $500,000 in renovations in one year, and a hotel that had been in the red saw revenues increase by 13 percent.

That Holiday Inn now is paying Mehta's bills.

Neither he nor his wife, Asha, draw a salary from the Camelot.

But reviving the Camelot is a much different story than reviving a Holiday Inn. Mehta says the Camelot is different because it is a convention hotel. He is hoping to increase his advertising exposure and gain worldwide reservations through affiliation with either Ramada or Clarion Inn.

Kinark and city officials are giving Mehta time because they have a desire to see someone -- anyone -- succeed with the hotel.

There are widespread reports of employee dissatisfaction, but Mehta still seems to have the people who count on his side.

For now.

Camelot General Manager John Charles said when Mehta came to Little Rock, "It's not going to be done today or tomorrow. But he realizes what it takes to get back, and he wants to prove to the city of Little Rock that he is here to do it."

The jury is leaning against Mehta after eight months at the helm. But it's a jury that's still out.
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Author:Rengers, Carrie
Publication:Arkansas Business
Date:Mar 16, 1992
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