Creditors Won’t Delay Innkeepers’ Exit Plan

by San Antonio Attorney

Innkeepers’ creditors reached an agreement to hold arguments over a chunk of the bankrupt hotel operator’s estate worth $8 million until the court has approved the company’s exit plan in bankruptcy.

The pact will avert any delay in the Innkeepers exit plan which Apollo Investment Corp, the owner, and the shareholders were concerned about. The agreement was brought out during a hearing at a U.S. Bankruptcy court in Manhattan on Tuesday.

Innkeepers filed for bankruptcy in July 2010 due to unmanageable secured debt that made it very hard to maintain its hotels.

It has sold 72 of its hotels in an auction which Cerberus Capital Management and Chatham Lodging Trust won for more than $1 billion. The sale plan was already authorized by Judge Shelley Chapman. A confirmation hearing scheduled on June 23 will declare the whether the creditors would give it a go.

A court filing by Midland Loan Services in May 24 said that the sale plan could go against the bankruptcy rules. Midland has serviced around $825 million mortgage loan at a fixed-rate.

Midland, which appears to take roughly $100 million of loss on its claims, stated that it has to be entitled to about $8 million which Innkeepers estate will gain from the sale. It added that the bankruptcy law does not allow a bankrupt company to gain from the sales before its creditors have been fully paid.

According to court papers filed by the owner and shareholders of Innkeepers, the judge should permit the claim for the time being in order that Midland can give its vote on the sale plan. The resolution of the matter must be dealt with after the court’s confirmation.

The office of the U.S. Trustee has also raised an issue regarding the proposal of Innkeepers, particularly the part that would turn over the ownership of five of its hotels to Chatham for $195 million. According to the trustee, this would relieve Apollo from creditors’ claims.

 

–  If you want to find out more about how to wipe out your debts by filing bankruptcy, consult with a San Antonio bankruptcy attorney.

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