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New London - A foreclosure auction to sell the shuttered Lighthouse Inn on Sept. 5 could help pay off more than $120,785 in back taxes owed to the city and an outstanding mortgage on the multimillion-dollar property.
Tens of thousands of dollars in back taxes are also owed to the U.S. Internal Revenue Service, the state Department of Revenue Services and other, smaller creditors, according to liens on file in the city clerk's office.
In the spring, the New London Superior Court appointed attorney Narcy Dubicki to function as the "committee of sale" conducting the foreclosure auction at noon on the first Saturday in September at the inn. A sign notifying the public of the upcoming sale is posted in front of the property at 6 Guthrie Place.
Dubicki, who practices in New London, said Wednesday the sum owed to the city has been calculated as accurate through Sept. 30.
Registered bidders who can show they have certified funds in the form of checks for deposits of $290,000 will be allowed to bid that day, Dubicki said. That amount, set by the court, represents 10 percent of the initial court-established appraisal. A second appraisal will be done before the sale, he said.
The other creditors will have to stand in line until the mortgage holder and the city are paid by the court from the proceeds of the sale before they see any money, Dubicki said.
DRS alone is owed more than $96,211, according to records in the city clerk's office. The IRS has multiple liens on the property dating back to 2003 that run as high as $57,898.
The holder of the inn's mortgage, Business Loan Center Inc. of New York, now known as Business Loan Center LLC, is suing McGrath Hotels LLC, which owns the inn, Dubicki said. The mortgage holder is also suing McGrath Hotels principal James McGrath.
McGrath Hotels LLC, which still has the title to the storied inn just yards away from where the Thames River meets Long Island Sound, bought it in 2001 for $1.2 million. Records vary, but some indicate the mansion, which was built in 1906 for steel baron Charles Strong Guthrie, was transformed to an inn by 1928.
The inn closed in August 2008. Its financial troubles began to take root when the Business Loan Center Inc. gave notice it would foreclose on the property. That followed a series of legal collection maneuvers by creditors, including the IRS, a refrigeration and heating company and food wholesalers.
The foreclosure was ordered by the court on April 20 of this year, and the state Appellate Court dismissed an appeal, moving the auction forward.
The inn came close to destruction in 1979 when a major fire swept through the rambling old building. But it was rebuilt and reopened, partly through fundraisers organized by local loyalists determined to see it come back to life.
According to the state's judicial Web site, one of the defendants in the foreclosure case, Maureen Clark, is representing herself in the legal matters. She could not be reached to comment.
Clark and co-owner Christopher Plummer had been arrested for allegedly failing to pay employees and furnish time and wage records. Plummer's case is pending in New London Superior Court. His next court date is Sept. 11. The state decided not to prosecute Clark's case and it was nolleed in March.
Michael Sheehan of the Conway Londregan law firm is representing the Business Loan Center. He did not return a call seeking comment.
Middlefield attorney David E. Rosenberg, who is representing McGrath Hotels LLC, could not be reached at his home late Wednesday.
The Lighthouse Trust is also listed as a defendant. It is not clear who the principals of the trust are.