The subcontractors who worked on the Radisson hotel renovation project in Menomonee Falls, Wis., in 2010 and 2011 might soon receive their long-overdue payments. After the developer defaulted on its loans shortly after the hotel opened, the prospect of collecting anything was uncertain.
The Menomonee Falls Village Board, which had loaned the developer millions, approved a settlement agreement on March 3 that would establish a $400,000 fund to pay subcontractors that have filed claims.
The fate of the settlement was be discussed in Waukesha County circuit court on March 31 in a hearing, at which the lawyers involved suggested modifications that will be considered in another hearing set for April 28.
The payments will come too late to heal all the wounds, financial and psychological, suffered by the Radisson subcontractors, some of whom had given up hope.
“I’ve been told by professionals to write it off and forget it, I’ll never see it,” says Nic Meyer, owner of project subcontractor Nic Meyer Construction. He says his company’s claim is for about $27,000.
In 2011, months after the Radisson’s opening, project general contractor Gil-Her Ltd., which has gone out of business, filed a $2.8-million lien on behalf of the subcontractors.
Then, project owner Lodging Investors of Menomonee Falls failed to make payments on a $17-million loan from the village. The village board filed a foreclosure suit on the property in June 2012.
When Lodging Investors’ foreclosure redemption period ends in June, the village plans to sell the hotel.
Hotel is Going Strong
Since the Radisson opened for business in 2011, it has been operating normally and, according to the village, draws a steady stream of income.
According to the subcontractors, the lack of payment in the intervening three years has hurt their businesses. Dennis Forston of Forston Construction, which performed masonry and concrete work on the Radisson, says his company’s claim was for about $28,000.
“It was difficult, when you’re not getting paid that much money, it really puts a strain on finances and relationships and everything else,” Forston says. “After all of that, you’re taking money out of your own pocket. We won’t be made whole on this because our lawyer is going to be taking a chunk of this thing too, but at least we’ll have something.”
Forston says that his attorney has not been able to provide a clear projection of how much time will pass before they know whether their claim will be approved. “I was actually surprised they were even going to settle,” says Forston, “but I’m glad to see that something is happening.”
In the meantime, at least one claimant has gone out of business completely. In February 2013, Badger Lighting & Signs filed for Chapter 11 bankruptcy protection.
According to media reports on the bankruptcy, Badger Lighting has ceased operations, but president and owner Susie Beard expressed an interest in resuming business at some point.
It Still Isn't Over
If the settlement is approved in its current state, the fund for the subcontractors would be operated by attorney Michael Dubis, the designated receiver for the project’s defunct contractor Gil-Her. The settlement provides an additional $250,000 for administrative expenses and payment for the receiver.
“We have made progress, with the assistance of the village of Menomonee Falls, in reaching the goal of securing a fund for the workers and material suppliers on the hotel,” says Dubis.
The Menomonee Falls village attorney declined to speak in detail about how the village decided on the $400,000 value for the fund, and Dubis has not yet calculated a total of claims made so far.
“Until we actually have a settlement approved, there’s no sense in me looking through claims specifically to see whether they’re correct if I don’t have any money yet,” says Dubis.
But says Mark Darnieder, who represents several of the subcontractor claimants: “No sub is going to get paid as much as they want to get paid."