SAN JOSE — The future of an East San Jose hotel complex is playing out in a Texas bankruptcy case that the property’s owner hopes will help ward off a foreclosure of the lodging site.
The property involved is a 204-room hotel hub that consists of a Motel 6 and a Super 8 by Wyndham, according to documents on file with the Santa Clara County Recorder’s Office and at the Texas bankruptcy court.
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The bankruptcy case, filed by the affiliate that owns the two-hotel property, is poised to at least delay foreclosure proceedings. These types of bankruptcy cases don’t always prevent a foreclosure from eventually taking place, however.
Choice Hotels International provided the hotel with $21.7 million in financing in 2024 and now seeks to foreclose on the failed loan, Santa Clara County records show.
Jagmohan Dhillon, a real estate executive who controls affiliates that own multiple hotels, heads up the business entity that owns the East San Jose hotels at 2560 Fontaine Rd. near the interchange of U.S. Highway 101 and Tully Road.
Choice Hotels, however, is attempting to end Dhillon’s control and replace Dhillon with a trustee to manage the bankrupt property.
In bankruptcy court papers, Choice Hotels claims that Dhillon has mismanaged the hotels and can’t be trusted to head up the property’s ownership group.
“Mr. Dhillon oversaw and cannot be expected to arrest the ongoing deterioration of the (hotel) property,” Choice Hotels states in a bankruptcy court filing. “He is responsible for the absence of reliable books and records” pertaining to the two-hotel site.
Choice Hotels also noted in the filing that Dhillon and his company, Galaxy Hotel Management, have presided over other failed hotels in Texas and elsewhere.
In December 2025, State Bank of Texas foreclosed on a 102-unit Super 8 by Wyndham hotel in Livermore after a Dhillon-led affiliate defaulted on a $7.7 million loan.
Choice Hotels sees a similar pattern of financial failure for the East San Jose hotel complex.
“The other lawsuits, foreclosures, and bankruptcy proceedings echo this one,” Choice Hotels states in court papers. “Mr. Dhillon is failing. Mr. Dhillon and Galaxy have mishandled money and kept bad books.”
As a result, Choice Hotels expressed skepticism that Dhillon would be able to extricate the hotels from their financial quagmire.
“No new investor will lend to a debtor that Mr. Dhillon controls if given the truth,” Choice Hotels stated in court papers.
Dhillon’s affiliate has filed a plan to reorganize the finances of the hotel property.
During a deposition on Dec. 9, 2025, Dhillon was asked numerous questions about his hotel properties, their finances, and their setbacks, including bankruptcies and foreclosures.
At one point, Dhillon was asked if he recalled how many bankruptcy cases he has filed for his hotel properties. Dhillon confirmed there were four bankruptcies in 2025.
Asked if there were “seven or eight bankruptcies in total,” Dhillon said, “maybe, yeah, something like that. I don’t remember. I don’t have (an) exact count.”
It also appears that the East San Jose hotel complex is worth less than the property’s $21.7 million loan.
“The debtor believes the current value of the hotel, including furniture, fixtures, and equipment, is $17 million, based in part on an appraisal completed by HVS Consulting & Valuation,” the Dhillon-led group stated in bankruptcy court papers.