A liquidation plan proposed by the secured lenders of River Road Hotel Partners LLC, the bankrupt operator of an InterContinental Hotel near Chicago’s O’Hare International Airport, was approved by a federal judge a week after an appeals court ruled in the lenders’ favor.
U.S. Bankruptcy Judge Bruce Black signed an order today confirming the plan proposed by lenders led by Amalgamated Bank, according to a filing in federal court in Chicago.
Black in October denied a River Road motion that would have prevented Amalgamated from bidding for the company’s assets using what it’s owed, known as a credit bid, instead of cash. River Road appealed Black’s decision to the 7th Circuit Court of Appeals.
The company lost that appeal on June 28, when the judges ruled that the lenders could make a credit bid for the properties. Other appeals court rulings have denied credit bids, which left open the possibility of the case being heard by the U.S. Supreme Court.
David Neff, a lawyer for River Road, said in a telephone interview that the judge’s order today applied only to the O’Hare property and not to another property in the bankruptcy case, a Radisson Hotel at Los Angeles International Airport. River Road is considering whether to file a Chapter 11 plan for the Radisson property, he said.
“The confirmation of the plan has no impact on the companion case involving the Radisson LAX and its ability to be appealed to the Supreme Court,” Neff said. “The lenders haven’t filed a plan in that case.”
Amalgamated, the principal lender and agent for more than $162 million in loans to construct the O’Hare hotel, proposed its own Chapter 11 plan after River Road asked the court several times to extend the period of time during which it could exclusively file a plan.
River Road planned to sell the hotel and other assets at an auction. Och-Ziff Real Estate Acquisitions LP offered a starting bid of $42 million in cash. Amalgamated opposed the plan because the bid was only 26 percent of what River Road owed at the time of the Chapter 11 filing.
River Road filed for Chapter 11 creditor protection in August 2009. The economic recession had a “devastating impact on the entire hotel industry,” the company said in court papers.
The InterContinental Chicago O’Hare, with 556 guest rooms, opened in September 2008, 10 days before Lehman Brothers Holdings Inc. (LEHMQ) filed for bankruptcy. “Corporations severely cut back their travel and meeting budgets,” River Road said in court filings.
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