A foreclosure action involving the Holiday Inn Resort and Conference Center on Grand

Island is back on track, likely leading to an auction of the property.

The 263-room hotel on Whitehaven Road continues to operate as a Holiday Inn. An agreement

struck between American Hospitality Partners, which bought the hotel in 2004, and mortgage

holder Royal Bank of Canada allows the bank's foreclosure action to continue. The bank says it

is owed about $7 million.

American Hospitality filed for Chapter 11 bankruptcy in early May, a step that put the

foreclosure process on hold. Under an agreement approved Monday by U.S. Bankruptcy Court Judge

Carl Bucki, American Hospitality will drop its bankruptcy case.

The bank agreed to pay up to $275,000 to cover administrative fees in the bankruptcy case,

including for American Hospitality's attorney. Remaining funds will be used to cover sales,

hotel-occupancy and bed taxes that American Hospitality owes the state and Erie County.

Another term of the agreement says American Hospitality will not impede the bank's

foreclosure action, which began in March.

"We think the resolution is mutually beneficial to all the interested parties," said Arthur

Baumeister, American Hospitality's attorney.

Garry Graber, an attorney for Royal Bank of Canada, said the foreclosure process will

likely be completed in 60 to 90 days. A foreclosure auction is expected to follow, unless

another party steps forward in the meantime with a purchase offer.

The Grand Island hotel, which has a sweeping view of the Niagara River, was built in 1972.

When American Hospitality purchased it, the group called the property a "jewel," based on its

waterfront location, space for banquets and meetings, and fitness club.