Facing millions of dollars in debt to numerous creditors, Roxby Development LLC filed for Chapter 11 bankruptcy protection late Monday night.

That move not only put the brakes on the foreclosure sale of the historic McLure Hotel that was scheduled for Tuesday morning, it kept trustees of the Scottish Rite building in East Wheeling from moving forward on its own foreclosure proceedings against Roxby.

Yet with the bankruptcy filing, Roxby Development President Jeffrey J. Morris was hopeful his company could emerge from a reorganization to continue its work revitalizing several areas of the city.

A Chapter 11 filing allows Roxby the opportunity to reorganize its debts and financial affairs, and attempt to map out a court-approved plan to resolve those issues.

The 13-page filing came at 9:40 p.m. Monday, filed with the U.S. Bankruptcy Court for the Northern District of West Virginia. On Tuesday morning, a public auction of the Market Street landmark – also known as the McLure House – and its adjacent parking garage at 1215 Chapline St. in downtown Wheeling had been scheduled to take place through a trustee’s sale at the Ohio County Courthouse.

Roxby had purchased the McLure Hotel in 2021 through a seller-financed agreement for $6,245,000, with 20% down at closing. However, Roxby has accumulated a significant amount of debt since then, and last month, the previous owner of the hotel – Fran Garey of FA Management Inc. and FG Management LLC – set the legal wheels in motion to foreclose on the property. More than $5.3 million was still owed, according to the terms of the deed of trust. There are tax liens and mechanics liens on the property as well.

The debt on the McLure House is the tip of the iceberg when it comes to the outstanding debts of Roxby Development, Monday’s bankruptcy filing shows. Also doing business as Roxby Labs – a subsidiary that once performed COVID-19 testing – and The McLure House Hotel, the company estimated its liabilities to be in the range of $10 million to $50 million, according to the bankruptcy filing.

“I got notice at 3 a.m.,” said attorney David Delk, who had been named substitute trustee on the deed of trust for the McLure Hotel, noting that he received an email from Roxby’s attorney notifying him of the bankruptcy filing just hours before the sale was scheduled to take place. “Because of the bankruptcy, an automatic stay is issued, preventing companies from proceeding with any action against them.”

Delk said he had been prepared to move forward with the sale of the McLure House on Tuesday, but the bankruptcy filing prevented it. Roxby took ownership of another Wheeling landmark in 2020 – the Scottish Rite building in East Wheeling through a similar deed of trust. The trustees for the Scottish Rite were also planning to take legal action against Roxby, which was shielded from them and other creditors when the bankruptcy petition was filed.

“Currently, there’s no running water or heat in the building,” said attorney David Croft of Spillman Thomas & Battle, who represents the Scottish Rite. “At this time, they are delinquent on the property taxes due.”

Because of the non-payment of property taxes, Roxby is in default of the terms outlined in the deed of trust, according to Croft. The trustees of the Scottish Rite had planned to move ahead with foreclosure proceedings on that facility, as well.

According to the bankruptcy filing, the list of creditors who have the 20 largest unsecured claims include tax collectors on the local, state and federal levels, several vendors and providers of professional services, among others. Topping that list is $658,434 owed to McKesson of Irving, Texas, for medical supplies for Roxby Labs.

Other claims include $140,000 in payroll taxes owed to the Internal Revenue Service; a total of more than $76,000 owed to the West Virginia State Department for sales and use, payroll and hotel occupancy taxes; $56,000 in Ohio County property taxes on the Scottish Rite building; $149,000 to Gusto Payroll Services of San Francisco, Calif., for a payroll loan; $87,714 to Dendi of Raleigh, N.C. for medical supplies for Roxby Labs; and $67,000 to L&L Painting of Glen Dale for painting the hotel, among several other claims.

While the stigma of Chapter 11 bankruptcy is not a pleasant pill to swallow, both Morris and Croft said that Roxby’s filing is a good thing for all involved, as a resolution will eventually be reached through a transparent and fair process.

“The Chapter 11 reorganization filing for Roxby Development and Roxby McLure, the companies that operate and hold ownership of both McLure House a Ramada by Wyndham and The Scottish Rite Cathedral, was a measure taken to allow our businesses to refocus and move forward in a positive direction,” Morris said Tuesday.

“This action is one that allows us to get on track and improve revenue and operations at both locations. This will be achieved by way of new management via a professional, third-party management company for the operations of both buildings in addition to a now active Wyndham franchise agreement at the hotel.”

Morris said the new management company will cohesively manage event, entertainment and food and beverage operations at the Scottish Rite, as well as the hospitality operations at the hotel.

“This cohesive, professional and centralized approach to the management of the businesses will allow them to cross promote and drive revenue for both,” Morris said. “By filing for a Chapter 11 reorganization, we are able to secure value and increase that value over a reasonable time frame in order to better protect the interests of not only the companies, our employees and assets, but all of the creditors as opposed to only a few.”

Croft said the bankruptcy creates some sense of certainty for parties involved.

“It’s not a bad thing,” Croft said, noting that the process has now been set into motion toward a resolution. He added that those involved with the Scottish Rite were excited when Roxby first agreed to take over the preservation of the historic building. “However, his business model didn’t work out. At some point, everyone has to move on. We wish Mr. Morris well in his endeavors, but without heat and water, a building can deteriorate quickly. There needs to be a viable plan.”

It is important to the trustees of the Scottish Rite that the building be preserved, Croft stressed, noting that unlike the McLure Hotel, the Scottish Rite building is not designed to be a revenue-producing facility.

“The building is irreplaceable, and once it falls into disrepair, it would be a shame if it fell into a state where it can’t be rehabilitated,” Croft said. “There needs to be a suitable owner to keep up with the needed improvements and maintenance there, and Roxby Development does not appear to be able to do it.”

However, Morris indicated his hope and vision for these landmark properties and for the city as a whole has not changed through these challenges.

“I look forward to continuing to work hard towards the revitalization of the city of Wheeling and coming out of this in a healthy and strong way,” Morris said. “The McLure and Scottish Rite are too critical to the past, present and future of this beautiful city to not do everything in our power to make sure that they last as core parts of our community for decades to come. I look forward to working with our creditors and the court system to come up with amicable solutions that everyone is comfortable with and allows us to finish the execution of these projects in a positive and profitable way for all.”

Morris noted that the McLure hotel will not only continue to operate on a day-to-day basis through this process, it will welcome visitors who plan to come to Wheeling in the coming months for big events such as the Ogden Wellness Weekend later this month, the West Virginia regional games for The Basketball Tournament in July, Heritage Music BluesFest in August and other local attractions. He said the new branding partnership with the national hotel chain is big step in the right direction.

“We very much look forward to continued operations under the Ramada by Wyndham brand and to welcoming the many guests that will undoubtedly make their way to Wheeling this summer for the many great festivals and events happening around town,” Morris said.