U.S. Bankruptcy Court trustee Jack R. Reeves has filed a motion seeking to have the Mars Hotel & Casino property, which includes a building and an adjacent annex at the northwest corner of Sprague and Bernard downtown, declared abandoned.


The motion alleges that except for the restaurant, bar, and casino areas, the buildings are gutted, strewn with trash, and in violation of building and fire codes. It says liens totaling at least $2.5 million exist against the property and its contents, but that the value of the property, which was bought in 1992 for $275,000, is believed to be substantially less than the amount owed. Thus, the trustee believes the real property and its contents are of no value and burdensome to the estate, Reeves motion says.


A legal declaration of abandonment would remove the property from the bankruptcy estate and allow creditors to begin foreclosure proceedings against it.


Interested parties were given until late last week to file objections to the motion, after which Reeves said he would submit an order of abandonment to the Bankruptcy Court here if no objections were filed.


The Mars closed late last month after U.S. Bankruptcy Court Judge Patricia Williams ordered the liquidation of Spokane Mars Limited Partnership, which owned the property. Spokane Mars had filed for Chapter 11 reorganization about a year earlier, listing assets of $3.5 million and liabilities of $3 million.


The city of Spokane filed a motion last May to convert the case to a Chapter 7 liquidation, alleging that Spokane Mars had failed to pay more than $100,000 in gambling taxes, penalties, and interest. Rob Saucier, president of Mars Hotel Corp., the general partner of the limited partnership, claimed later that most of the debt to the city had been paid.


Bankruptcy Court documents claim, however, that Spokane Mars was delinquent on other taxes as well following its Chapter 11 filing and that its casino was on the verge of being shut down by the Washington State Gambling Commission due to various internal-security problems when the Chapter 7 liquidation was ordered.


The old, five-story building that housed the Mars Hotel & Casino business originally was known as the Arlington Hotel. Saucier announced plans a number of years ago to turn it into an upscale, boutique hotel with 33 suites. A long-awaited restaurant, called Two Moon Caf, opened there in 1994, and a sunken lounge, called Ugly Rumors, opened there about a year later, but the planned hotel suites, expanded to 43, never were completed.