A North Carolina hotel developer is teetering on the edge of insolvency after defaulting on a $17.5 million loan, prompting the lender to demand a court-appointed receiver to prevent financial disaster.

Lender AFF V HP AVL LLC filed a lawsuit in North Carolina Business Court on Friday, alleging that PMHB LLC, along with its owners Pratik and Manjulaben Bhakta and a family trust controlled by Pratik Bhakta, failed to repay a promissory note tied to a hotel project near Asheville Airport.

Originally valued at $12.8 million when issued in 2019, the note has ballooned to $17.5 million due to interest and fees. Now, with the project stalled, unpaid taxes accumulating, and contractor disputes escalating, AFF is asking the court to intervene before the situation spirals further out of control.

A Half-Built Dream Turns Into a Legal Nightmare

The lawsuit paints a bleak picture: the hotel remains only partially completed, and PMHB has allegedly failed to meet its financial obligations.

The loan officially matured in August, but PMHB did not pay off the balance. Further, the developer is accused of:

• Failing to complete construction
• Missing property tax payments
• Defaulting on a January loan installment
• Facing arbitration from its general contractor over unresolved claims

With these financial woes piling up like unpaid invoices, AFF argues that without court intervention, PMHB’s assets could be depleted before the lender recoups its money.

Lender Alleges Borrower Ignored Default Notices

AFF claims it has been in communication with PMHB’s legal counsel, but the borrower has not taken any steps to cure the defaults.

The lender asserts that PMHB and the Bhaktas knowingly ignored their obligations, leaving no choice but to seek a receiver to assume control of the company’s assets.

What’s Next?

Neither PMHB nor the Bhaktas have commented on the lawsuit, and their legal representation remains undisclosed. Meanwhile, AFF’s legal team, led by William L. Esser IV and Nicholas H. Lee of Parker Poe Adams & Bernstein LLP, is pressing forward.

With a mounting debt, a half-built hotel, and legal battles on multiple fronts, this case could determine the future of a multimillion-dollar development—and whether lenders can recover their investment before it's too late.