The other shoe has dropped for the owner of the former Hilton Pittsburgh.

BlackRock Financial Management Inc. has begun a foreclosure action against Shubh Hotels Pittsburgh LLC, one day after the prominent Downtown hotel lost the Hilton name.

The New York-based lender filed the complaint Friday in Allegheny County Common Pleas Court against Shubh and CEO Atul Bisaria.

As part of the action, BlackRock is asking the court to order the sale of the hotel. It also is seeking a judgment for $49.6 million, plus interest, the amount of the mortgage to Shubh.

BlackRock moved to foreclose on Shubh a day after Hilton Hotels & Resorts terminated its franchise license agreement with the hotel owner. It tied the decision to "violations of the terms" of the franchise agreement, although a spokesman would not discuss specifics.

As a result, the hotel, Pittsburgh's largest with more than 700 rooms, was stripped of the prestigious Hilton name and no longer is part of its reservations system. Hilton also has removed the hotel from its website.

In its complaint, BlackRock stated that termination of franchise license agreement is an "event of default" under the mortgage accord, amended early this year, and grounds for foreclosure.

BlackRock also charged that Shubh had defaulted on the loan by failing to provide information needed to finish a hotel audit the lender had requested.

The complaint stated that preliminary findings of the audit "indicate that borrower and/or guarantor have misappropriated hotel rents."

It added that based on the information received so far, Shubh "converted, misappropriated and/or misapplied hotel rents and revenues by directing funds required to be used for the payment of cash expenses pursuant to the approved annual budget to an operating account maintained by borrower for the payment of inappropriate fees and expenses not approved by lender pursuant to the approved annual budget."

Shubh officials "vehemently disagree with that analysis and those assertions," attorney Jonathan Kamin said.

In response to the foreclosure action, he added, "We're evaluating our options with both the lender and [Hilton] and we will reach a decision over the weekend."

"I understand the lender is doing what it has to do to protect what it thinks its rights are. We're going to do what we have to do to protect our rights," he said.

He declined to specify what that might be or what options are available to Shubh.

Mr. Kamin said there would be a hearing Tuesday on a request by BlackRock to appoint a receiver to oversee the hotel property during the foreclosure action.

A BlackRock attorney could not be reached for comment.

Sheriff deputies served the complaint to Shubh officials Friday afternoon at the hotel. The court action will not affect operations at the hotel or interfere with service to customers, spokeswoman Kerry Ford said.

"There are 400 employees at the Pittsburgh Hilton, and they continue to be dedicated to providing outstanding service to our customers and guests," she said.

BlackRock's move to foreclose culminates more than a year of turmoil at the hotel, during which Shubh piled up millions of dollars in liens and judgments because of money owed to contractors, vendors and others.

The most striking example of the financial tumult is an unfinished exterior addition, which greets visitors heading into the Golden Triangle from the Fort Pitt Bridge. It was covered with a banner for last September's G-20 Summit.

Work stopped on the addition in May 2009 when contractor P.J. Dick walked off the job after not being paid. Shubh said recently that construction had resumed.

In another controversy, Shubh less than two weeks ago changed managers, dismissing Virginia-based Crescent Hotels & Resorts after a legal battle with BlackRock, which fought against the move.

In that tussle, both BlackRock and Shubh accused the other of being in default of the loan agreement. The litigation spawned a July consent order issued by Common Pleas Judge Michael A. Della Vecchia that included a provision for the hotel audit.

After Hilton announced the termination of the franchise license agreement Thursday, Shubh said in a statement that it had transferred control of the hotel to Dr. Kiran C. Patel, a Tampa, Fla., cardiologist and philanthropist. Under the restructuring, Dr. Patel will own 89 percent of the property and Shubh 11 percent, the statement said.

Frank Amedia, the hotel's asset manager, also said that "constructive conversations" were under way between Hilton and Black Diamond Hospitality, which represented Dr. Patel, to try to win Hilton back.

Despite the termination of the franchise license agreement, Ms. Ford said the hotel would use the Hilton name indefinitely. In fact, the chain's name continued to be prominently displayed at the hotel Friday evening.

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