Innkeepers’ Restructuring Plan Still Awaits Court Confirmation

by San Antonio Attorney

An issue has been brought up by the office of the U.S.Trustee concerning a part of the reorganization plan of Innkeepers USA Trust which is to put up for sale five of the company’s properties worth $195 million.

Tracy Hope Davis of the U.S. Trustee said that the reorganization plan would free Apollo Investment Corp Inc from the creditors and shareholders’ claims against Innkeepers, according to the court papers filed Monday evening.

In 2007, the common shares of Innkeepers have been acquired by Apollo Investment Corp in a $1.5 billion cash transaction.

According to the trustee, although it would not affect the payments to creditors, the company has not provided an explanation for releasing Apollo Investment from the claims. Because of this, the court cannot approve the restructuring plan of Innkeepers.

Moreover, the proposal of Innkeepers does not mention any explanation as to why Apollo should be released from the claims, the trustee added.

The calls made to the restructuring officer and attorneys of Innkeepers were not returned right away.

The selling of the properties is one aspect of the restructuring plan. The majority of the company’s assets have been bought by investment firms Chatham Lodging Trust and Cerberus Capital for an estimated price of $1.12 billion at a bankruptcy auction, but the restructuring plan is yet to be approved by creditors.

Innkeepers filed for Chapter 11 bankruptcy protection in July 2010 saying that the company is having a very hard time maintaining its properties due to its debt, which includes a secured debt worth $1.29 billion. Its listing of assets is valued at $1.5 billion while its total debt is $1.52 billion. The company’s bankruptcy is one of the largest in 2010.

Based in Palm Beach Florida, Innkeepers operates more than 70 hotel brands including Marriott, Hyatt, Hilton, and others.

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