The Danforth Inn, a West End mansion in Portland that dates to 1823, faces an uncertain future as it heads to the auction block in less than two weeks.

The owners of the nine-bedroom luxury inn, who also own the Camden Harbour Inn, filed for bankruptcy in March, staving off foreclosure temporarily. They then tried, unsuccessfully, to sell the Portland property for nearly $2.6 million in order to restructure their holdings, the owners said.

At the time they put the property on the market, Raymond Brunyanszki and Oscar Verest said The Danforth Inn had posted only marginal profits and had little potential for growth.

But now Brunyanszki said a couple has a purchase-and-sale agreement to buy the inn, although the prospective buyers are still arranging financing. He declined to say who they are, citing the negotiations.

“We are still looking at all options, to either continue with the Danforth or to sell it,” he said.

To gain more time, Brunyanszki said he and Verest are appealing the auction order and a hearing has been scheduled in federal bankruptcy court Wednesday.

At the hearing, Brunyanszki and Verest will try to convince the judge to cancel the auction and allow them to sort out their next steps.

“We have different exit plans,” Brunyanszki said.

He said the Danforth has “more than sufficient equity” to continue to operate while the owners work through Chapter 11 bankruptcy, which allows companies to restructure their debt and then emerge as an ongoing business. In March, a restaurant and bar inside the inn were closed.

Brunyanszki and Verest bought the inn in 2014 for $2.4 million and said they planned to invest up to $1 million in upgrades, including opening a restaurant and bar.

Bar Harbor Bank & Trust, which loaned the money for the purchase of both inns, “has been very aggressive in handling this,” Brunyanszki said Monday.

Brunyanszki said he and Verest ran into financial trouble shortly after buying The Danforth, when they started a $700,000 kitchen renovation so they could open a restaurant.

Adding a restaurant had always been the plan, he said, similar to the couple’s operation at the Camden Harbour Inn. But the bank, he said, reneged on an agreement to finance the work and told them only days before the renovation was to begin, which they pursued anyway.

A call seeking comment from the bank was not returned Monday.

UNCERTAIN MARKET

The owner of an upscale real estate firm said The Danforth’s situation is a rarity in the market.

“I’m kind of surprised that it’s fallen to auction,” said Daren Hebold, the president of Lux Realty in Portland. He said the market for inns and bed-and-breakfast operations is uneven in Maine, but he thought that the Danforth’s location in Portland would set it apart.

“It seems to be very hit-and-miss,” Hebold said of the market, noting that some inns with strong cash flows in Kennebunk are on the market and have not sold. “I think there’s a pretty limited pool of buyers.”

The allure of being the owner of a small inn in Maine might be strong, he said, but the reality is that it requires long hours and the businesses don’t generally generate a lot of income.

“It becomes a labor of love,” he said.

The inn has attracted “a fair amount of interest and it’s a beautiful property,” said Stef Keenan of Keenan Auction Co., which, barring action by the court, will be handling the Nov. 16 auction.

Potential buyers will have to put up $50,000 for the right to bid on the property. No minimum bid has been set.

If it fails to garner a lot of interest, Keenan said Bar Harbor Bank & Trust has the right to top the highest bid and take possession of the inn in the hope of reselling it.

Keenan noted that any buyer would need to close on the sale within 30 days, meaning most would need to have their financing already set up before the auction. They also will need to pay back taxes, and sewer and water bills that total nearly $42,000, he said.

The Camden Harbour Inn, which is larger than The Danforth Inn, with 20 rooms and a restaurant, also was scheduled to be sold at auction in March, but that was canceled after the bankruptcy filing. Keenan said an auction has not yet been rescheduled. The Camden property was accepted in 2013 into Relais & Chateaux, a marketing association for upscale properties around the world.

Hebold said the terms of the Danforth auction make it difficult for a private individual to step in to buy the Portland property. Larger lodging operators, he said, might have a string of bed-and-breakfasts or inns, but they might find a nine-room property too small to be of interest.

He speculated that the property could draw developers looking to turn the inn into condominiums. Another possible use, but less likely, is converting it back to a single-family home, Hebold said.

The house was built in the Federal style and then remodeled in the Italianate, with a cupola added, Greater Portland Landmarks said.

It was bought in the mid-1870s by William Widgery Thomas, the president of Canal National Bank and a descendant of George Cleeve, one of Portland’s original settlers.

After a remodel by John Calvin Stevens, Elias Thomas – William Thomas’ grandson and also a president of Canal National Bank – moved in. The remodeling included a lighting update to equip fixtures to use either gas or electric, Greater Portland Landmarks said.

Elias Thomas lived in the house until his death in 1936 and his widow, Dorothea Thomas, sold the building to the Roman Catholic Diocese in 1941. It was used as a rectory until 1991 and then the building was vacant until 1995, when it was converted to The Danforth Inn.

Edward D. Murphy can be contacted at 791-6465 or at:

[email protected]

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