Bankruptcy proceedings offer businesses a chance at a fresh start and the ability to reorganize debts, but they also often offer the public a unique chance to see inside the business as financials and other operating details find their way into public documents.
The bankruptcy proceedings for the Iron Horse Hotel, a business formally known as Rider Hotel LLC, offers one of those unique opportunities. The hotel filed for bankruptcy in early June after unsuccessfully trying to find alternative arraignments with its mortgage holder as it sought to recover from the COVID-19 pandemic and financial issues brought on by a prior management company.
To be able to continue operating, the hotel, which is located at 599 W. Florida St. in Milwaukee’s Walker’s Point neighborhood, needed court approval to use its existing cash in its operations. Ultimately, the hotel reached an agreement with its lender that includes a budget to govern how it will use its cash through the week of July 12.
Here are a few highlights from the budget:
Overall revenues of $1.3 million for the five-week period starting June 14, including $713,200 in room revenues and $441,600 from food and beverage.
Weekly room revenue ranges from $117,600 to $180,200.
Weekly food and beverage revenues range from $79,200 to $101,900
Total operating disbursements for the five-week period are $1,025,500, including $289,600 for wages, payroll taxes and benefits and another $33,900 for payment to contract employees. The budget period includes two payroll dates.
The cost of food and beverage goods sold is budgeted at $132,500 and ranges from $23,800 to $30,600 per week.
Contract services and maintenance are budgeted at $25,400 per week for a total of $127,000.
Other expenses detailed on the budget include $5,000 per week for reservation costs, $11,300 per week for general, administrative and marketing and $10,000 to $14,300 per week for bank and credit card fees.
The bottom line is the Iron Horse Hotel expects operating cash flows of $274,500 during the five-week period, with weekly cash flows ranging from a $171,600 loss in the week of June 21 – which includes payment of wages, contract employees and sales and occupancy tax – to a $196,200 profit the week of July 12.
The Iron Horse bankruptcy cases is still in its early stages. Attorneys for the hotel have said owner Tim Dixon is committed to continuing to own the 102-room hotel and maintain its independence moving forward.