Rapid City SD – The Rushmore Hotel’s lender says the hotel spent more than $300,000 it wasn’t allowed to spend, stopped sending the financial reports it’s required to send, and has six days to make it right — or lose its authority to use its own operating cash entirely, without another court hearing required.
BankWest, Inc., the hotel’s senior secured creditor, filed a formal Notice of Termination Events on Oct. 1, accusing Tzadik Mount Rushmore Hotel, LLC of violating the cash collateral orders that have governed its spending since the bankruptcy began.
The notice gives the debtor until 5 p.m. Eastern, Oct. 6 to cure the violations. If it doesn’t, the hotel’s authority to use cash collateral terminates automatically — no further court order needed.
The Hearing That Vanished
The timing is hard to ignore. The only matter on Judge Mindy Mora’s entire Sept. 30 calendar was this case — a 1:30 p.m. hearing on BankWest’s pending motions to dismiss the case and lift the automatic stay.
That morning, the hearing was canceled. The Zoom cancellation notice gave no explanation beyond two words from the host: “Hearing Continued.”
The next morning, BankWest filed the Termination Notice.
Three Payments BankWest Says It Never Approved
BankWest’s letter, sent by its counsel at Berger Singerman LLP, identifies three payments totaling $305,389.96 that it says cleared the hotel’s accounts without its consent and in violation of the cash collateral orders:
- Western States Fire — $122,790.00, cleared on or about Sept. 22. The company is listed as an unsecured creditor in the hotel’s own bankruptcy petition — at $116,595, not $122,790.
- It’s also listed in the hotel’s own Critical Vendor Motion at a third, different figure: $102,790.
- BankWest says the hotel hasn’t explained either discrepancy, or explained a separate, earlier check to Western States Fire dated before the bankruptcy was even filed.
- DAK Generators — $63,700.17, cleared on or about Sept. 25.
- The company isn’t listed as a creditor in the bankruptcy petition at all — only in the Critical Vendor Motion.
- The payment alone is larger than the hotel’s entire budgeted maintenance expenses for any single week in September.
- Pennington County Treasurer — $118,899.79, dated Sept. 29, which BankWest believes covers property taxes. The hotel’s own interim budget — the one it submitted to the court — lists $0 for property taxes.
The Reports Stopped Coming
Beyond the three payments, BankWest says the hotel has simply stopped meeting its reporting obligations under the cash collateral orders. Among the deficiencies listed in the notice:
- A budget-to-actual report due Sept. 16 wasn’t delivered until Sept. 25. Nothing has been filed for the period since.
- Weekly cash disbursement registers, required every Wednesday, haven’t been delivered for any week since Sept. 16.
- Monthly operating statements and the hotel’s Monthly Operating Report for August — both due Sept. 15 — have not been filed.
- Bank statements and check images BankWest formally requested have not been produced.
BankWest also says the reporting it did receive doesn’t reconcile with the hotel’s own transaction records, and doesn’t disclose any of the three unauthorized payments at all.
The notice flags several unexplained gaps between what the hotel’s books show and what it reported to the court — including a $41,153.86 payment to Best Western for “commissions/fees” on Sept. 8 that doesn’t match either the hotel’s Franchise Fee line ($1,600) or its Travel Agency Commission line ($8,689) for that period, a $121,718.46 payroll disbursement that exceeds the hotel’s reported payroll totals for the same week, and a $23,898.12 health insurance payment against a budgeted line of $2,658.
Spending Running Well Outside Budget
Even setting the three unauthorized payments aside, BankWest’s letter documents a pattern of individual budget line items running far past what the cash collateral order permits — a 10 percent variance, per line, per period.
Examples cited include Repair & Maintenance running 382.5 percent over budget in the first week of September, Liquor Cost of Sales 58.7 percent over, and the hotel’s Franchise Fee itself running 60 percent over its budgeted amount that same week.
A Bonus Plan BankWest Won’t Approve
The hotel’s proposed October budget includes roughly $132,900 in bonus payments, concentrated in the third week of the month — enough, combined with other projected expenses, to produce a projected net loss of $115,153 for that week alone.
BankWest says it does not consent to the bonus payments and “reserves all rights with respect to any such payments to insiders.”
What “Losing Cash Collateral” Actually Means
BankWest’s lien on the hotel extends not just to the building itself but to the revenue it generates — every room booking, every restaurant and bar sale.
Under bankruptcy law, a debtor can’t spend money that’s pledged as someone else’s collateral without that lender’s consent or a judge’s order overriding it.
In practice, that means every dollar the hotel has used to make payroll or pay vendors since it filed for bankruptcy on Aug. 13 has technically been BankWest’s money, spent with BankWest’s permission.
That permission is exactly what the two cash collateral orders at the center of this dispute are: agreements, not gifts.
BankWest didn’t volunteer to let the hotel keep operating on its own revenue — it consented, reluctantly, in exchange for the budget limits and reporting requirements laid out in those orders. The Termination Notice is BankWest saying the hotel broke its end of that bargain.
If the Oct. 6 deadline passes without a cure, that consent ends automatically, with no hearing required to make it happen.
The hotel’s authority to use its own incoming revenue terminates on the spot — meaning it could become unable to legally pay its next payroll or its vendors out of hotel income, not because of some abstract change in legal status, but because the money stops being spendable without either a new agreement from BankWest or a judge willing to force one over BankWest’s objection.
That’s a harder, more adversarial path than the one the hotel has been on, and it’s not guaranteed.
Unlike the pending motions to dismiss the case or lift the automatic stay — both of which require a hearing and a ruling — this consequence doesn’t.
If the hotel can’t cure in time, the operational disruption could arrive before a judge weighs in on anything else.
What Happens Next
BankWest’s notice gives the hotel until Oct. 6 to return the full $305,389.96 to its debtor-in-possession account, deliver every missing report, and bring its spending back within budget — and explicitly reserves the right to decide any attempted cure isn’t good enough.
The notice also states that BankWest intends to use all of this as additional grounds for its already-pending motions to dismiss the case and lift the automatic stay, the same motions that were supposed to be argued at the hearing that was pulled from the calendar the day before this notice was filed.
Sourcing
This report is based on:
- PACER docket, In re Tzadik Mount Rushmore Hotel, LLC, Case No. 26-20751-MAM, U.S. Bankruptcy Court, Southern District of Florida:
- Doc. 67 — BankWest, Inc.’s Notice of Filing Written Notice of Termination Events and Demand for Accounting, including the attached Oct. 1, 2026 letter from Berger Singerman LLP (filed 10/1/26)
- U.S. Bankruptcy Court, Southern District of Florida public hearing calendar for Judge Mindy A. Mora, Sept. 30, 2026
- Zoom meeting-cancellation notice, “Judge Mora – Motion Calendar,” sent via zoomgov.com, Sept. 30, 2026, 7:06 a.m. Mountain Time
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