Innkeepers, Cerberus May Announce Settlement of Suit Over Takeover Today
Cerberus Capital Management LP, the New York-based private-equity firm, and hotelier Innkeepers USA Trust may announce a settlement of their $1.12 billion lawsuit as early as today, said a person familiar with the discussions who declined to be identified because the talks are private.
A trial originally was to start Oct. 10 on the suit in which bankrupt Innkeepers sought to force Cerberus and Chatham Lodging Trust (CLDT) to carry out a contract to buy 64 hotels for $1.12 billion. Completion of the sale would allow Innkeepers to carry out the Chapter 11 reorganization plan that a U.S. bankruptcy judge in New York approved in June. The trial has been delayed four times, including twice yesterday, with it now scheduled to begin Oct. 20 in Manhattan.
Cerberus reached a tentative settlement over the weekend with Innkeepers, according to two people with knowledge of the discussions. Under that agreement, Cerberus and Chatham will cut the amount they pay for Innkeepers, said the people, who didn’t disclose the new price and asked not to be named because the talks aren’t public.
The accord, the culmination of a weekend of negotiations, isn’t final and could fall apart, the people said. A final agreement is subject to approval by the U.S. bankruptcy court judge overseeing Innkeepers’ restructuring.
“We don’t have anything to say at this time,” said Thomas Mulligan of Sitrick & Co., an outside spokesman for Innkeepers in New York, in a telephone interview.
John Dillard, a spokesman for Cerberus, declined to comment on the case in a telephone interview today.
The lawsuit against Cerberus is Innkeepers USA Trust v. Cerberus Four Holdings LLC, 11-02557, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Chapter 11 case is In re Innkeepers USA Trust, 10-13800, in the same court.
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