A company operated by Denver restaurateur Jesse Morreale has filed for bankruptcy protection and is facing foreclosure on the Broadway building housing his El Diablo and Sketch restaurants.

Morreale Hotels LLC filed for Chapter 11 bankruptcy last week in the U.S. Bankruptcy Court of Denver. The filing lists 13 unsecured creditors with claims totaling $6.8 million.

Separately, the restaurant building, located at 21 W. First Ave., is the subject of a foreclosure filing with the property scheduled to go to auction Jan. 3, according to documents on file at the Denver Public Trustee’s office.

Morreale said the information is inaccurate and that the foreclosure auction will not take place Jan. 3.

The building, at First Avenue and Broadway, has been the subject of a dispute between city officials and Morreale over building-safety issues.

Morreale said he is “in the process of resolving” the foreclosure. He said El Diablo and Sketch remain open and will continue to operate regardless of the foreclosure proceedings.

Another Morreale property, at 3015 E. Colfax Ave. and . which housed the now-closed Rockbar, also is in foreclosure.

The Broadway property was closed for three weeks in July by Denver building inspectors for conditions that they described as “an immediate hazard to the life safety of occupants and the public.”

Morreale disputed the action, saying he had complied with city directives for structural improvements.

The property faces a Dec. 31 deadline to address repairs mandated by Denver Community Planning and Development. Agency spokeswoman Andrea Burns said the deadline is not affected by foreclosure proceedings.

Foreclosure documents filed on the Broadway building show that Morreale Hotels LLC owes $2.02 million from an original loan of $3.78 million issued in 2008.

The East Colfax building, site of a motel in addition to the defunct Rockbar, has a loan with a balance of $1.15 million.

Morreale said the loan problems stem from the Federal Deposit Insurance Corp. seizing control last year of the properties’ original lender, FirsTier Bank of Louisville.

Morreale said the loans have changed hands several times since then, making it difficult to determine which entity held the loans.

Morreale declined to comment on the bankruptcy filing. Such filings are made in some instances to delay foreclosure sales.

Steve Raabe: 303-954-1948, sraabe@denverpost.com or twitter.com/steveraabedp