Bankruptcy Filing Halts Breakers Hotel Foreclosure

The ownership group behind the Fairmont Breakers Long Beach is using bankruptcy protection to halt a foreclosure auction of the hotel following its Nov. 2024 opening.

Breakers Mezz I, LLC, the entity controlling the equity of the hotel, filed for Chapter 11 bankruptcy protection on Oct. 2, 2025, in the Central District of California. The filing, case number 2:25-bk-18796, prevented a foreclosure auction by senior lender X-Caliber Funding that would have resulted in the forfeiture of Pacific6 Enterprises’ ownership stake.

As the Fairmont-managed property welcomes guests to its 14-story Spanish Renaissance Revival tower, court documents describe a liquidity crisis driven by high-interest bridge financing.

Pacific6, led by John Molina, is seeking court-supervised debt reorganization, claiming the hotel’s value as a luxury asset surpasses the $100 million to $122 million owed to creditors. The case’s outcome may shape the future ownership of a key Long Beach landmark ahead of the 2028 Olympic Games.

The Filing

The Chapter 11 petition was filed days before a scheduled Uniform Commercial Code (UCC) foreclosure auction set for Sept. 26, 2025. Unlike a traditional property foreclosure involving a deed, a UCC foreclosure targets the company’s ownership interests.

Breakers Mezz I is the mezzanine borrower with full membership in the real estate-owning entity. X-Caliber Funding, the senior lender, began foreclosure after the borrower defaulted on the loan. By filing for bankruptcy, Breakers Mezz I triggered an automatic stay, a federal injunction that immediately stops all collection activities and foreclosure proceedings.

Legal filings indicate the move was designed to prevent a forced liquidation attempted by the lender. Pacific6 argues that a foreclosure auction would likely result in the lender acquiring the hotel at a distressed price, eliminating the original owners’ investment.

By moving the dispute to bankruptcy court, the ownership group aims to prove that the property has sufficient equity to repay creditors in full over time.

Assets vs. Liabilities

Filings list the company’s total assets between $100 million and $500 million, a figure that reflects the capitalized cost of the renovation and the projected market value of the stabilized hotel. Total liabilities are reported between $50 million and $100 million, primarily consisting of defaulted loan principal and accrued interest.

Despite this apparent solvency on paper, the company lacks the liquid cash to service its debt. The project’s main financial burden is a $122.2 million refinancing package from Feb. 2024 with X-Caliber Funding and CastleGreen Finance, comprising a $64.45 million bridge loan and $57.75 million in C-PACE financing.

The bridge loan, intended to cover final construction costs, had a high interest rate and required a quick hotel opening to repay it.

When the opening was delayed from early 2024 to Nov. 2024, it prevented the property from generating the operating cash flow necessary to service its debt. Without cash flow to pay the monthly debt service, and with commercial lending markets tightening, the borrower faced a maturity default.

The Debt

C-PACE assessments, unlike traditional mortgages, are linked to property tax bills and take precedence over most other liens. Failure to pay can lead to tax foreclosure, overriding even the first mortgage held by X-Caliber. This prioritization pressures senior lenders to ensure taxes are paid, prompting enforcement actions.

The project used Historic Tax Credits (HTCs), which include a five-year recapture period. If the property is sold or foreclosed shortly after opening, the IRS can reclaim some tax credits. The potential loss of millions of dollars discourages liquidation for both borrowers and lenders, favoring reorganization over foreclosure.

Origins of the Crisis

Pacific6 acquired the property in 2017 with plans for a $40 million to $60 million restoration, targeting a 2020 opening. However, the project encountered setbacks, including the COVID-19 pandemic.

Preservation standards required by the Secretary of the Interior for tax credit eligibility further complicated the work. The Technical Preservation Services (TPS) initially denied the project’s Part 2 certification on Dec. 19, 2022, a decision that stood for eight months until a successful appeal reversed it on Aug. 1, 2023.

Crews were tasked with restoring original 1920s features, including cast stone exteriors, plaster moldings and gold-leaf detailing in the lobby. As the timeline extended from 2020 to late 2024, construction costs surged, eventually pushing the total project budget to a reported $160 million.

For nearly four years past the initial target date, the property generated zero revenue while consuming millions in carrying costs, including loan interest. These expenses depleted the interest reserves intended to service the debt during the lease-up phase.

Pacific6

Pacific6 Enterprises, a Long Beach partnership founded in 2017 by John Molina and five local investors, has filed for bankruptcy. The group aims to invest in socially and environmentally significant local projects.

The group’s portfolio previously included the Long Beach Post (divested in 2023) and currently holds assets such as Pacific Mariculture and the Ocean Center building. The Breakers filing is the first major Chapter 11 case for a Pacific6-controlled entity.

Recent moves by Pacific6 suggest broader liquidity consolidation. In mid-2025, the group listed the Ocean Center for sale shortly after completing its $50 million renovation. While Molina described the decision to list the property as a natural exit after a ‘completed mission,’ the timing aligns with the escalating financial pressure at the Breakers.

Operations Continue Under Fairmont

Despite the filing, operations at the hotel continue. This stability is due to the legal separation between the building’s ownership and its management.

Fairmont Hotels & Resorts, a subsidiary of Accor, operates the property under a management agreement. Fairmont employees staff the hotel, manage bookings and oversee guest services. The management company does not own the real estate and is not liable for the mortgage debt.

Bankruptcy filings explicitly state that guest services will continue without interruption. Since its soft opening in Nov. 2024, the hotel has received guests and reopened its famous rooftop bar, the Sky Room. While reviews have been generally positive regarding the restoration, some guests have noted high costs, including a $46 “urban experience fee,” and service inconsistencies typical of a new hotel opening.

The Legal Case

The bankruptcy case is currently being handled by Judge Vincent Zurzolo, who will oversee the reorganization process.

Under Chapter 11, Pacific6 has 120 days to propose a reorganization plan, during which the lender cannot impose its own plan. Options include refinancing the debt, bringing in an equity partner, or proposing a “cramdown” plan to modify loan terms.

A central point of contention will be the hotel’s valuation. Pacific6 claims the property is worth over $160 million, citing replacement cost and brand value as equity for creditors. X-Caliber Funding is likely to argue for a lower valuation, suggesting that the debt exceeds the asset’s value, which could support a foreclosure motion.

The lender’s initial aggressive pursuit of a UCC foreclosure suggests a potential “loan-to-own” strategy. If the lender proves the equity is worthless, they could acquire the hotel for the debt amount, gaining ownership of a renovated Fairmont property.

Implications for Long Beach

The financial troubles of the Breakers are a big deal for the revitalization plans in downtown Long Beach. Mayor Rex Richardson has focused on expanding housing in the city’s preparation for the 2028 Olympics, including the news of the then-upcoming hotel opening at the 2023 Grow Long Beach.

A prolonged bankruptcy or closure could alter the city’s goal of establishing a hospitality market capable of supporting high average daily rates. With the Olympics approaching, the city relies on high-end inventory like the Breakers to house dignitaries and sponsors.

This political and economic significance may render the Breakers “too big to fail” in the eyes of local officials, potentially prompting municipal involvement or mediation to keep the hotel operational.

History of Financial Instability

The current financial troubles are not the first for the property at 210 E. Ocean Blvd. The Breakers has a century-long history of economic volatility mirroring the region’s boom-and-bust cycles.

Opened in 1926 by banker Fred B. Dunn, the hotel originally served as a symbol of Long Beach’s status as a seaside resort. However, the Stock Market Crash of 1929 and the 1933 Long Beach Earthquake decimated tourism revenue, forcing the hotel into its first bankruptcy in the 1930s.

Conrad Hilton acquired the distressed asset in 1938, launching the Sky Room and attracting Hollywood celebrities like Cary Grant and Elizabeth Taylor. After Hilton’s tenure, the building entered a long period of decline, eventually serving as a senior living facility for nearly 50 years before closing in 2015.

Pacific6’s 2017 acquisition promised to break this cycle and restore the building to its original glory. While the physical restoration has been achieved, the project’s financial stability remains elusive.

The coming months in bankruptcy court will determine if the current ownership group can stabilize the asset or if the “Grand Dame” of Long Beach will change hands once again.

For any inquiries or further information, please contact Jose Cervantes at JoseC.Press@pm.me