Five years after opening the doors of The Brick Hotel & Restaurant on Georgetown's The Circle, owners Lynn and Ed Lester are waking up from a financial nightmare.
"I was never happier to see a year end than in 2013 or more thrilled about a fresh start in 2014," said Lynn Lester. "Both our regular customers and those folks looking to plan events can be confident that The Brick isn't going anywhere."
According to court documents, M&T Bank filed three lawsuits against the Lesters in April 2012 for defaulting on about $3.4 million in loans, which were secured by the entrepreneurial couple in 2008 and 2009. The Lesters have spent the last two years negotiating an out-of-court settlement with M&T Bank.
Now, Lynn Lester says she and her husband have very minimal relations with M&T Bank and have established a new relationship with WSFS Bank.
"We have reached an agreement with our former lender," she said. "We have a new lender and now have very manageable debt."
Megen Morris, a spokeswoman for M&T Bank, said she can't comment on the institution's relationship with any specific customers.
"There are federal privacy laws in place to protect our customers," Morris said. "We are happy The Brick Hotel will continue to be a part of the Georgetown community."
A rough start
Lester said financial difficulties started almost immediately when she reopened The Brick in November 2008. The recession had only started roughly a year earlier and the tenant renting and operating the restaurant portion of the building had to be evicted for falling delinquent on their bills.
"Within the first year, we had to take over the restaurant and I lost that revenue stream that I was counting on, which was pretty significant," Lester said. "We could have shut the restaurant's doors; but we didn't want to because it had already established a very nice reputation."
Lester said she contacted M&T Bank, formerly Wilmington Trust, roughly a year and a half after obtaining the loans because, "I knew we were going to have difficulty meeting our mortgage obligations."
When The Brick's misfortune and legal issues became public knowledge via the local media, Lester said event bookings and gift card sales took a major hit.
"We knew we were going to work it out; but that doesn't give much assurance to someone planning ahead for a wedding," she said. "And why would someone buy a gift card for a place they thought may not stay open?"
After the lawsuits were filed by M&T Bank, the Lesters began discussing settlement options; but bank officials were not biting, saying the offers were too low.
Page 2 of 3 - "At one meeting, I put my keys on the desk and said, 'Here. You've got yourself a hotel and restaurant,'" Lynn Lester said. "That's when I think they started cooperating with us. When I offered them the keys, I did it hoping I would get the outcome that I got. The bank doesn't want an empty building sitting here."
The two parties reached an agreement, and the Lesters received a new, more manageable loan from WSFS Bank to cover the difference between what M&T Bank wanted and what the Lesters could afford.
Lester said she never truly considered throwing in the towel.
"My heart and soul is in this property and in this project," she said. "I remained very committed to The Brick because over the years, revenues for the inn and the restaurant have continued to increase, even during the difficult times we've had, which indicates to me that there's a future for this business."
Lester said a weight has definitely been lifted. Also, revenue from event bookings and gift card sales throughout this year's holiday season was up significantly.
"My original goal was at the end of five years, we would be at a place where I could afford to hire someone to run The Brick and Ed and I could go to the islands and enjoy retirement," she said. "But we hit five years in November and I'm guessing we've got another three years. That's my goal."
Lester said she saw an outpouring of support from the community, with many writing unsolicited letters to M&T Bank expressing concerns surrounding the possible closure of The Brick.
Scott Thomas, executive director of Southern Delaware Tourism, said he sent a letter stating The Brick serves as a tourism anchor for Georgetown.
"It generates local tourism when you have a lodging business like The Brick with personal service, a restaurant and a tavern," Thomas said. "With more visitors comes more dollars for Georgetown."
Sussex County Administrator Todd Lawson said he also sent a letter of support.
"The Brick is literally one of the cornerstones of The Circle and the Lester Family has made the hotel and restaurant a magnificent gem for our community to enjoy," Lawson said. "We are fortunate to have a facility like this in Georgetown and I couldn't be happier to see their success."
Karen Duffield, executive director of the Georgetown Chamber of Commerce, said in just over five years, the Lesters have elevated Georgetown to a premier destination for luxury accomodations and fine family dining with their renovation and management of The Brick.
Page 3 of 3 - "The Brick Hotel is a historic landmark in Georgetown and its renovation into a four-star restaurant and accommodation truly shines a spotlight on the county seat," Duffield said.
The Brick Hotel is a National Historic Registry property. It was built in 1836 and has served as a hotel, bank, courthouse, law office, coffee shop and more.