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Hotelier Severyn Ashkenazy cherishes a 1976 letter from the accounting firm Harris, Kerr & Forster saying the newly opened L'Ermitage Hotel in Beverly Hills would not be successful. Ashkenazy, then a 36-year-old apartment developer with no experience in hotels, disagreed.
Since that time, both the accountants and the Polish-born entrepreneur could have the last laugh.
If success means class, Ashkenazy, now 52, wins hands down. L'Ermitage now carries the Mobil Guide Five Star and the Automobile Club's Five Diamond ratings, the only hotel in Southern California so honored, besides the Ritz Carlton in Laguna Beach.
He operates a fleet of seven small luxury hotels in Beverly Hills and West Hollywood: the 114-suite L'Ermitage, the 154-suite Le Parc, the 121-suite Le Dufy, the 188-suite Mondrian, the 198-suite Bel Age, the 77-suite Le Reve, the 14-suite Le Petit Ermitage. An eighth hotel, Le Valadon, is scheduled to open this summer in West Hollywood. Ashkenazy estimates their combined value at $400 million.
And Ashkenazy himself became a star in the hotel industry for setting new standards of service. He is credited with pioneering the suites-only hotel concept. He calls himself "the most copied hotelier since Charles Ritz."
But if his hotels are comfortable, his business life has been hellish. In 1986, his hotel empire began to crash around him. He opened three hotels in quick succession -- Bel Age, Mondrian and Le Dufy -- in 1983 and 1984, in anticipation of a tourism boom during and after the Los Angeles Summer Olympics.
But the boom never happened. With his hotels half-full, Ashkenazy found himself in a cash bind.
Hounded by his lenders and other creditors, he filed Chapter 11 bankruptcies in February 1986 for Le Dufy and Mondrian to prevent a lender, Southern California Savings & Loan, from foreclosing on Dufy after Asheknazy reportedly failed to make payments for 10 months on $8.5 million loan. The following month, Ashkenazy put L'Ermitage into Chapter 11 when Beverly Hills Savings & Loans threatened to foreclose on the luxury hotel for defaulting on a $28.5 million loan.
It didn't help Ashkenazy that some of his lenders were having money troubles of their own. Beverly Hills Savings & Loan has been declared insolvent and taken over by the Federal Savings and...