Worcester Business Journal

8 Worcester Business Journal | March 23, 2026 | wbjournal.com A creditor in the Chapter 7 bankruptcy case of once-prominent Central Massachusetts developer Charles "Chip" Norton alleges he improperly diverted more than $1 million from the Wellsworth Hotel in Southbridge. rough his attorney, Norton denied the allegations. e complaint was filed in feder- al bankruptcy court on Feb. 27 by X-Caliber Rural Capital, a New York- based lender. e filing focuses on a $13.25-million loan made by X-Caliber to Southbridge Associates LLC, a Norton-controlled entity involving the Wellsworth Hotel. If successful, X-Caliber's complaint could prevent Norton from discharging his debts through bankruptcy, poten- tially leaving him on the hook for about $76 million in debt so far claimed by various creditors. A hearing is set for April 6 where Norton will be asked to explain his financial conduct. Norton, developer of Mercantile Center high-rise in Worcester and founder of Wellesley-based Franklin Realty Advisors, was the driving force behind redevelopment of what is now known as the Southbridge Innovation Center, which includes the site of the Wellsworth Hotel. Formerly known as the Southbridge Hotel & Conference Center, the 203-room hotel and other parts of the innovation center were once the campus of the American Optical, formerly the world's largest optical manufacturer. e hotel has commercial tenants, includ- ing the MassHire Southbridge Career Center and Shades Lounge, a bar and restaurant, according to Google Maps. Allegations of wrongful distributions X-Caliber's complaint alleges Norton made just under $1.06 million in equity distributions to entities controlled by himself, in violation of the loan agree- ment. X-Caliber claims these distribu- tions happened as Norton sought loan relief from the firm, citing the under- performance of the hotel property. In a 2024 letter attached to the com- plaint, Norton claimed revenues at the property were down 19%, with occu- pancy down 6%, and said the property was expected to have an operating loss of $707,096 in 2025. Norton was seek- ing to modify terms of the loan. e complaint claims X-Caliber was alerted by hotel management of the transfer of funds to Norton-controlled entities aer he had filed for bankrupt- cy. Records attached to the complaint show the $1.06 million in distributions occurred in eight transactions, with the first in January 2025. e complaint shows the final transfer, worth $100,000, occurred on July 1, eight days aer Nor- ton had filed for bankruptcy on June 23. John Christopher, personal coun- sel for Norton and managing partner at New York law firm Christopher & Christopher, denied the allegations brought by X-Caliber, saying funds were not diverted. "Transfers were made from the prop- erty's operating sweep account to the holding company, which in turn used those funds to pay the property's bills, including utilities, common area main- tenance, and other necessary expenses," Christopher wrote in an email to WBJ. "e accounting records will show that money was used to keep the hotel running, not to disadvantage lenders or other creditors." Michael Trainor, counsel for X-Cali- ber and partner at Philadelphia law firm Blank Rome, did not respond to an email from WBJ seeking comment. Norton was issued a notice of default on the loan in July, according to an attached letter from X-Caliber, with the firm instructing Norton to direct all payments from tenants to X-Caliber. e firm then said a visit to the prop- erty revealed Norton had at least two new tenants at the site, and it claimed Norton had not been forwarding rent payments from them to X-Caliber. X-Caliber's complaint also focuses on a power purchase agreement relating to SBC Energy, an on-site power plant built in 1910 as part of the original American Optical Complex. Norton sold the site of the power plant for $5.5 million in 2021, according to the Worcester Telegram & Gazette, but continues to own the business as the sole manager of the SBC Energy entity, according to filings with Massachusetts Secretary of the Commonwealth. e plant provides electricity to the complex. e complaint says, unbeknownst to X-Caliber, Norton had agreed to a power purchase agreement for the hotel at above-market prices, benefitting from this agreement while further harming the financials of the hotel. e complaint did not specify the rate paid by the hotel. Norton's attorney pushed back against these claims. "e pricing in the power agreement was established using the applicable commercial rate in Central Massachu- setts, which is the standard published rate by the local supplier (National Grid) used for comparable commercial usage," Christopher wrote. "In our view, the complaint mischaracterizes routine cash-management and power-supply New allegations against Chip Norton Lender accuses once-prominent developer of embezzling $1M+ from Southbridge hotel FILE PHOTO | EDD COTE Chip Norton, seen here in 2022 at the Southbridge Innovation Center, is facing accusations of embezzlement related to his management of the site. REAL ESTATE INSIDER BY ERIC CASEY

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