Auction possible for Grand Island Holiday Inn

A foreclosure action involving the Holiday Inn Resort and Conference Center on Grand Island is back on track, likely leading to an auction of the property.

The 263-room hotel on Whitehaven Road continues to operate as a Holiday Inn. An agreement struck between American Hospitality Group, which bought the hotel in 2004, and mortgage holder Royal Bank of Canada allows the bank's foreclosure action to continue. The bank says it is owed about $7 million.

American Hospitality filed for Chapter 11 bankruptcy in early May, a step which put the foreclosure process on hold. Under an agreement approved Monday by U.S. Bankruptcy Court Judge Carl Bucki, American Hospitality will drop its bankruptcy case.

The bank agreed to pay up to $275,000 to cover American Hospitality's administrative fees in the bankruptcy case, including for American Hospitality's attorney. Remaining funds will be used to cover sales and bed taxes American Hospitality owes to the state and Erie County.