How the owner’s bankruptcy is shaping the future of the historic Colonial Inn
AI-generated summary reviewed by our newsroom.
- Landlord Allied DevCorp filed for bankruptcy but the Colonial Inn stays open.
- Inn remains booked for events despite $4.7 million debt and ongoing hearings.
- Renovation added major upgrades after 2018 purchase and historic preservation.
Its landlord has filed for bankruptcy, but the Colonial Inn remains open for business under new management in downtown Hillsborough, according to representatives.
The inn at 153 W. King St. has stood as a landmark for 187 years, and is listed in the National Register of Historic Places. In 2018, it was saved from pending demolition, reopening in 2020 after a significant and costly renovation.
The inn had shown no signs of slowing down before property owner Allied DevCorp LLC filed for bankruptcy on Sept. 18 in U.S. Bankruptcy Court in the Eastern District of North Carolina.
No hearing has been scheduled yet, but former Colonial Inn general manager Elise Tyler said the bankruptcy will restructure Allied DevCorp’s debts, so it can repay a variable rate loan used to buy and restore the 28-room Colonial Inn.
The inn is booked for weddings and other events for the next three months, she said.
Allied DevCorp reported having about $4.7 million in debt, according to bankruptcy filings, including the $4.5 million it still owes to Celtic Bank. The inn is valued at $3.6 million, court documents show.
Celtic Bank was the only option that Allied DevCorp partners Justin Fejfar and Joe Goatcher had in 2018 for securing a large loan to restore the historic structure, said Tyler, who holds a stake in the company. The project ran into more challenges, from construction delays to the COVID pandemic and labor shortages.
Sharply rising interest rates and a sluggish hospitality industry followed the inn’s reopening in November 2020, and the monthly loan payment became “a total gut punch,” she said. Efforts to refinance the loan failed.
History, community memories, and a destination
Tyler said filing for bankruptcy and turning over property management to S&L Hospitality and its partner, Choice Hotels, was the best outcome for the inn and its employees, who can now get health insurance and other benefits. She will get more time with her family after managing the inn 24/7 for the last five years, she said.
The inn “is an entity much bigger than me, and that’s what we always wanted it to be,” Tyler said.
“You can see and feel the love of the restoration and all those historic elements that are preserved, and it’s the vault of five years worth of memories and connections,” she said. “People have been calling and texting me, and they’re like, you know, we’re sad, but we’re so happy for you … that’s a testament to what we’ve been able to create there, and that doesn’t change.”
S&L Hospitality owner Eric Lund stayed at the inn recently and said he “loved it.”
“It is a national treasure,” he said, that “gives you goosebumps, because you’re walking around and you’re touching mantles and walking up steps that are original. You just imagine who, over the centuries, has walked up and down these staircases.”
He noted the inn’s new general manager, Kaity Farthing, has worked at other Ascend hotels, including in Boone. Later this year, she and her staff will reopen the inn’s restaurant, which closed in July due to damage from Tropical Depression Chantal.
“To be able to let people know that this is a destination, and for people to be able to travel into the area and get a piece of history and to see all the unique characteristics of the property is really incredible,” Lund said.
Colonial Inn survives war, near destruction
The inn was built in 1838 as the Orange Hotel, undergoing multiple renovations and name changes over the years. In the latter days of the Civil War, it was occupied by Union troops under the command of Gen. William T. Sherman.
Legend has it that the inn was saved from destruction when a former owner’s wife, Sarah Stroud, waved her late husband’s Masonic apron from a second-story porch. A Union officer spotted the apron and, as a fellow Mason, stopped the troops from looting the inn.
In 2001, when the inn closed, it was still drawing a crowd, particularly for the Sunday lunches of fried chicken and family-style sides.
Chapel Hill businessman Francis Henry bought the inn at auction but neglected its maintenance while wrestling with the town over how to save it. The town charged Henry in 2015 with demolition by neglect, condemning the inn as a public and fire hazard.
The town rejected Henry’s request to demolish the building, turning instead to eminent domain proceedings and working with a UNC School of Government group on a plan to save it. In 2018, Allied DevCorp bought the property for $880,000.
The company’s $2.9 million renovation replaced the kitchen and constructed a ballroom, a guest wing, and a large lawn for weddings and events. Tyler partnered with local businesses to promote Hillsborough and provide special guest experiences.
Fejfar said at the time that they hoped to emulate the ambiance of second-story porches and front stoops in New Orleans.
“Instead of being a dark street, once you get past Nomad [restaurant], I think that whole block is really just going to come alive,” Fejfar said.
The News & Observer’s attempts to reach Fejfar and Goatcher by phone Tuesday were unsuccessful.
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This story was originally published September 24, 2025 at 7:59 AM.
