An independent bankruptcy trustee is taking charge of an unfinished hotel in Coachella, Calif., and will be empowered to probe lender allegations that developers bungled the project envisioned as a luxury destination for attendees of the Coachella Valley Music and Arts Festival, WSJ Pro Bankruptcy reported. Judge Sheri Bluebond of the U.S. Bankruptcy Court in Los Angeles on Wednesday granted a request by the lender, an investment fund managed by Calmwater Asset Management LLC, to appoint a chapter 11 trustee over project developer Glenroy Coachella LLC, which filed for bankruptcy last month to avoid a foreclosure sale. The ruling comes after the Calmwater fund and another early investor in the project accused real-estate investor Stuart Rubin, the manager and majority owner of Glenroy Coachella, of mismanaging the project and improprieties such as using a false budget that underreported project costs to get a $24.4 million construction loan. Mr. Rubin in court papers filed last week denied the allegations of wrongdoing, including the claim that he used an alternative budget to mislead the lender. Mr. Rubin said he has spent thousands of hours on the hotel project without collecting a development fee or other remuneration. Judge Bluebond said that there are valid concerns over how the hotel project has been handled, including claims that developers have withheld information and records from investors and a court-appointed receiver, which has been overseeing the project since 2019.
