Spicer Mansion headed for another foreclosure sale
Aug. 9—It appears Chelsea Groton Bank will prevail in its pursuit of another foreclosure sale of Spicer Mansion, the boutique Mystic hotel whose fate is tied to a bevy of lawsuits playing out in multiple jurisdictions.
In a filing late last week in New London Superior Court, the bank asked that a new sale date be set after the successful bidder in an initial sale nearly five months ago failed to close on the $3.52 million deal.
Chelsea Groton filed its request after a U.S. Bankruptcy Court judge ruled Aug. 1 that the hotel owner's personal bankruptcy would not prevent a new Spicer Mansion foreclosure sale from proceeding.
Brian Gates, whose Gates Realty owns the hotel, filed for Chapter 11 bankruptcy protection from creditors on May 20, a day before scheduled foreclosure sales of four other properties he owns, including his Stonington residence. The auctions of those properties, which Gates used to secure a Chelsea Groton mortgage on Spicer Mansion, have been stayed.
Chelsea Groton alleged in a 2019 suit that Gates had defaulted on a $1.8 million mortgage it granted in 2015.
Bankruptcy Judge James Tancredi cited a number of failings on Gates' part in ruling that the bank could pursue another sale of the hotel, starting with Gates' failure, "without good and sufficient excuse" to appear at a July 28 hearing in bankruptcy court in Hartford or via Zoom to address Chelsea Groton's motion for relief.
Tancredi wrote that Gates had failed "to make or complete" a $10,000 payment to the bank, as ordered, or to explain the reasons for such failure and the source or sources of a partial payment of $6,000.
The judge also noted Gates' failure to provide evidence "of any bona fide efforts ... to secure an investment, refinancing or sale of the Spicer Mansion Property," and cited New London Superior Court Judge Karen Goodrow's July 27 finding that Spicer Mansion operations had "seriously" violated town zoning restrictions.
Goodrow sided with the town following a series of remote hearings in May and June that included testimony from town officials and hotel customers. Goodrow concluded that Gates and Gates Realty had willfully violated a 2020 court order prohibiting the hotel from operating a public restaurant, a basement "Speakeasy" bar and hosting large weddings and other events.
The judge rejected Gates' argument that the town's orders were unclear or ambiguous. A hearing on sanctions has been scheduled for Sept. 2.
In his order, Tancredi also noted Gates has failed to address his role in the Spicer Mansion foreclosure sale that fell through after a Gates business associate, Ross Weingarten, submitted the low bid of $3.52 million.
Superior Court Judge Robert Young granted Chelsea Groton's request that Weingarten forfeit a $367,000 deposit when Weingarten failed to meet the deadline for closing on the deal. Weingarten has appealed to state Appellate Court, challenging Young's granting of the bank's request as well as the judge's denial of a motion to reargue the matter.
Tancredi's order says the new Spicer Mansion sale can take place "no sooner than 45 days hence."
