The Hilton Pittsburgh is facing more financial woes after attorneys for a union health and welfare fund garnished the bank accounts of the hotel's owner and its top officer in an effort to collect a $1 million debt.
PNC Bank and Wells Fargo Advisors were ordered Friday to freeze accounts held by Shubh Hotels Pittsburgh LLC and its chief executive officer, Atul Bisaria, to satisfy a judgment obtained by the Hotel Employees and Restaurant Employees International Union Welfare Fund and affiliates.
A complaint filed last month in U.S. District Court charged that Shubh owed the fund $751,833 in health benefit payments and $272,056 in pension payments dating to December 2007.
Under an agreement reached last May, Shubh promised to resume making monthly payments to the fund, starting with those due for March 2009. If it did not, the fund had the right to enter a judgment for all amounts due.
It didn't take long for the issue to come to a head. According to the complaint, checks written to cover $148,069 in benefits and pension contributions due for May bounced. Shubh also defaulted on $132,066 in contributions due for June.
A month later, attorneys for the fund sent a notice of default to Shubh and gave the Florida-based company 48 hours to remedy the situation by wiring $280,136 in payments. That did not happen, triggering the complaint and the subsequent judgment.
The garnishments apply to PNC accounts held by Shubh and to a former Wachovia Securities (now Wells Fargo Advisors) account held by Mr. Bisaria.
Claudia Davidson, local counsel for the health and welfare fund, said the garnishments prevent money from leaving the accounts but don't block deposits; she said the fund took action after trying repeatedly to resolve the issues with Shubh.
"We've been working with them for years. This has been a long period of frustration.
It's not like they owed money in April and we filed the lawsuit. We've been trying to work with them for a long time," she said.
Ms. Davidson said the fund was open to settling the matter with Shubh and Mr. Bisaria as long as the contributions are made.
The fund receives deposits from employers for workers throughout the country. In Pittsburgh, 170 to 200 workers at the Hilton are affected. They have been receiving their health benefits despite the delinquencies, Ms. Davidson said.
Last week's garnishments are the latest in a series of financial woes afflicting the Hilton. Work stopped on an exterior addition in May after the contractor, P.J. Dick, filed court papers saying it was owed $317,273 by Shubh. That work has yet to resume. The steel skeleton for the addition will be covered by a welcome banner for the G-20 economic summit later this month.
The city revoked the building permit for the addition in July when the architect, Stephen Berry, asked for the return of his design plans and specifications after Shubh failed to pay him $308,575.
Susan Scattaregia, a steward for local 57 of Unite Here, which represents about 90 percent of the Hilton's workers, said the ongoing financial issues and last week's garnishments have left employees "very nervous."
Ms. Scattaregia said she was one of a group of employees who talked on Labor Day with a representative of Fuel Group International, a Tampa, Fla., company involved in hotels, entertainment and real estate. She said the workers were told the company was taking over management and labor relations at the Hilton.
Neither Fuel Group nor Shubh officials could be reached for comment. Nor could Mr. Bisaria be reached.
Ms. Scattaregia said employees were ready to "stand up and work with" Fuel Group or anybody else willing to bring the Hilton back to prominence.
"The cause of the apprehension is the lack of business, the bad press. We can't even wear our uniforms with our name tags to walk up the street because every normal joe on the street wants to know what's going on with the Hilton. It's embarrassing," she said.
"I never dreamt I would see the crown jewel of our city destroyed."