Santa Barbara hotelier Patrick Nesbitt has placed a portfolio of eight Embassy Suites hotels into Chapter 11 bankruptcy, listing at least $100 million in debts.

The bankruptcy filing, which gives Nesbitt’s companies protection from creditors while they restructure their debts, arises from a dispute with a lender over a $187.5 million loan used to refinance the hotels in 2006. Profits on the hotels have fallen drastically, but the bank’s loan servicer has refused to budge on repayment, according to court filings.

“We pay our bills. We have not had any interruptions with our vendors or staff,” Craig Stechman, senior vice president of sales and marketing for Windsor Capital Group, told the Business Times. “This gives us time to restructure our debt and this gives us time to put together a package to renovate the properties.”

The filings in U.S. Bankruptcy Court in Santa Barbara are for hotels in Tigard, Ore.; Bellevue and Lynnwood, Wash.; El Paso, Texas; Denver and Colorado Springs, Colo.; Livonia, Mich.; and Cincinnati.

The hotels require about $50 million in renovations in order to renew their license agreements with Hilton Hotel Corp., the parent company of Embassy Suites, according to bankruptcy court documents.

Santa Monica-based Windsor manages 22 hotels in 11 states. Nesbitt, a Santa Barbara resident, founded the company in 1974 and remains its CEO and chairman.

The eight Embassy Suites hotels that filed for bankruptcy make up a loan portfolio that was refinanced in early 2006 with a $187.5 million loan from Greenwich Capital Products, a loan now held in a securitization trust administered by U.S. Bank, according to a court declaration submitted by Nesbitt.

The loan matured in February 2011, but Nesbitt said in filings that he tried to start talks to refinance or modify the debt 14 months earlier.

“This hotel portfolio, like the economy in general, and the hotel industry in particular, has been devastated by the serious economic downturn that occurred in 2008,” Nesbitt said in court filings. He could not be immediately reached for comment for this story.

Net income for the eight-hotel portfolio fell from $22 million to $13 million in 2009, according to the company’s filings. Windsor said it was a financial blow not unlike what the hospitality industry experienced following the Sept. 11 terrorist attacks. After that crisis, the company restored profits to $22 million by 2007, Nesbitt said in filings.

Then the financial crisis hit, according to Windsor, and profits again plummeted. Nesbitt alleges in his filing that Torchlight Loan Services, the loan servicer, rebuffed Windsor’s requests to talk about the loan and asked that the hotel company not get in touch again until within three months of the maturity date.

“We continued to try to engage Torchlight, unsuccessfully, in loan modification discussions throughout all of 2010,” Nesbitt said in the filing. “Finally, in October 2010, four months in advance of the loan maturity date, we convinced Torchlight to begin discussions about refinancing the loan.”

Talks lasted for more than a year, Nesbitt said, until the bank, through Torchlight, sued in federal district court in New York. Torchlight asked the court to appoint a receiver to take over day-to-day management of the hotels.

Stechman told the Business Times that “one of the positive outcomes” of the bankruptcy filing is that it has halted those proceedings, meaning that the hotel management remains with Windsor. For guests and employees, it’s largely “business as usual,” he said. “Nothing has changed before during or even after the filing.”

The properties do need substantial renovations, a job with an estimated price tag of about $50 million, in order to renew their franchise licenses with Hilton, according to court documents. The licenses for five of the eight properties comes up for renewal in September.

The bankruptcy filing stops the termination of the franchise agreements, according to Nesbitt’s filing. He said he has several lenders lined up who “have expressed a willingness to provide the full financing” for the needed renovations. Those lenders are Wells Fargo Bank, JP Morgan, Duetsche Bank, Lowe Investments and LoanCore Financial, according to his filing.

Windsor is asking the bankruptcy court to order Torchlight to release about $4 million in capital reserves it alleges the loan servicer won’t hand over. Those funds would allow Windsor to do some of the renovation work, according to its filings.