Innkeepers USA Trust objected to a demand from Cerberus Capital Management LP and Chatham Lodging Trust (CLDT) to recover a $20 million deposit for their now disputed plan to acquire 64 of the bankrupt company’s hotels.
Innkeepers, an operator of 71 hotels including Residence Inns, Marriotts and Hampton Inns, already has final court approval of a bankruptcy plan that rests on the sale of 64 properties to Cerberus and Chatham. Cerberus and Chatham said yesterday that they had ended the $1.12 billion agreement, citing a possible adverse change that could affect Innkeepers’ long-term business. They didn’t state what the change was.
Cerberus and Chatham have demanded their $20 million deposit back from Wells Fargo, according to a status report filed in Manhattan court today. In an Aug. 19 letter to Wells Fargo, they demanded that 90 percent be returned to Cerberus and 10 percent be returned to Chatham.
Innkeepers objected, saying in a separate letter to Wells Fargo “there has not been an occurrence of any condition, change, or development that could reasonably be expected to have a material adverse effect” on its business since the deal was agreed to in May.
As a result, Wells Fargo must keep the money until a court rules on the dispute, Innkeepers said.
Separately, Innkeepers creditor Midland Loan Services, questioned a request for fees from Innkeepers bankruptcy counsel Kirkland & Ellis LLP, saying Innkeepers’ exit from bankruptcy was now uncertain.
Midland, servicer of an $825 million mortgage loan, said Kirkland & Ellis’s request for $1.6 million should be partially held back give uncertainties for all of Innkeepers’ interrelated reorganization plans.
Cerberus and Chatham’s announcement that they’ll terminate the purchase agreement raises “the question of whether such plans will become effective,” lawyers for Midland wrote.
The case is In re Innkeepers USA Trust, 10-13800, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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