The developer of an unfinished luxury hotel that sought to capitalize on the popularity of the Coachella Valley Music and Arts Festival is fighting in bankruptcy with a lender that has said the project was grossly mismanaged, WSJ Pro Bankruptcy reported. Glenroy Coachella LLC, the company behind the half-built hotel, said in court papers Friday that it filed an emergency bankruptcy to prevent lender Calmwater Asset Management LLC from moving forward with a foreclosure sale of the project’s land in Coachella, Calif. Monday’s chapter 11 filing in the U.S. Bankruptcy Court in Los Angeles marked the latest twist in litigation embroiling the project, pitched as “an upscale and modern oasis in the heart of the Coachella valley.” Operating under the Hotel Indigo banner, the finished hotel would include a 10,000 square-foot pool, retail stores, spa and other luxury amenities. An investment fund managed by Calmwater has accused Stuart Rubin, a real-estate investor and manager of Glenroy Coachella, of using a false budget to obtain a $24.4 million construction loan. Calmwater has accused Mr. Rubin of underreporting the true cost of building the hotel by about $20 million. Rubin and lawyers for Glenroy Coachella and Calmwater didn’t immediately return messages Friday seeking comment. Rubin has disputed Calmwater’s allegations. Project investor Gary Stiffelman has also accused Mr. Rubin of mismanaging the project, saying he diverted project funds for his personal use, including to cover the cost of a Bentley lease, according to court papers.
