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This article was published 18/11/2010 (4080 days ago), so information in it may no longer be current.
After months of speculation about its future, the Radisson Hecla Resort has been placed in receivership.
The move was initiated by the Business Development Bank of Canada (BDC), the senior lender to the 90-room property located in Grindstone Provincial Park in the Interlake.
The BDC is owed $8.5 million and the province is owed $5.5 million through its Manitoba Industrial Opportunities Program (MIOP).
"The BDC, in its opinion, is acting reasonably," said Geoffrey King, Montreal-based director of public relations for BDC. "In court (Thursday), we were told that the court agreed with that. We believe the court is the appropriate venue for determining this issue."
The two-year-old property shut down for the winter last week, with tentative plans to reopen May 1, 2011. It was closed for much of last winter, too, but opened during the Christmas season and spring break. It is unclear whether the hotel will reopen next spring.
Joe Paletta, president of The Paletta Group, the hotel chain that has run the Radisson Hecla since it opened in 2008, filed a statement of claim Thursday against the BDC and the province. He said his company has sunk more than $19 million into the property since signing a lease back in 2005.
The Radisson Hecla has been a popular destination for weddings and other special events from spring through fall, but wasn't able to attract enough guests to make it a viable enterprise in the winter, he said. It offered cross-country skiing, groomed snowmobile trails and wildlife viewing and photography in an effort to attract guests from November through April.
Paletta claims the province reneged on its approval allowing his company to build condominiums, villas and time-share properties on the site, which would have brought its accommodations up to 300 rooms. He said such an expansion was a must if the property was going to be profitable. A new approval was subsequently presented to Paletta, but it included a number of environmental demands.
Paletta had hoped a business plan focusing on health and wellness tourism, a sector he said is growing by 30 per cent annually, could be implemented and increase the resort's revenues in the winter months. The province turned down that proposal, he said.
"We hit a brick wall there. We've been negotiating since then and nothing has happened. So we decided not to put any more money into the project and file a statement of claim," he said.
A spokesman for the province said it will be defending itself "vigorously" against the lawsuit.
The court has appointed Winnipeg-based Lazer Grant LLP as the receiver. A spokesman for Lazer Grant was not available for comment Thursday.
The asset value of the Radisson Hecla, which includes the hotel, a spa and an 18-hole golf course, has been pegged at more than $30 million.