(Updates with plans to exit bankruptcy in first paragraph.)
June 29 (Bloomberg) -- Innkeepers USA Trust won final court approval for a reorganization plan that includes a sale of 64 of the company’s hotels to Cerberus Capital Management LP and Chatham Lodging Trust, paving its way to exit bankruptcy.
U.S. Bankruptcy Judge Shelley Chapman approved the plan today, after saying in Manhattan court June 24 that she intended to sign off on the hotel company’s restructuring. The plan has the support of Innkeeper’s secured creditors and more than 90 percent of its unsecured creditors, according to a company statement.
“The successful restructuring of this company and the preservation of 3,500 jobs is a truly remarkable achievement,” given the hospitality industry’s challenges in 2010, said Innkeepers’ Chief Restructuring Officer, Marc A. Beilinson, in a statement.
Innkeepers owns 71 hotels in 20 U.S. states, including Residence Inns by Marriott and Hampton Inns. Lehman Ali, a unit of Lehman Brothers Holdings Inc., helped finance the buyout of Innkeepers with a $1.2 billion loan. The company’s bankruptcy petition listed assets of $1.5 billion against debt totaling $1.52 billion.
The deal returns Chatham Chief Executive Officer Jeffrey Fisher to Innkeepers, which he founded in 1994 with seven hotels. The company was acquired by Apollo Investment Corp. in 2007.
At an auction in May, Cerberus and Chatham placed a winning bid of $1.1 billion for the largest group of hotels, topping an offer from Lehman Ali and Five Mile Capital Partners. Chatham, a real estate investment trust based in Palm Beach, Florida, has 10 percent of the joint venture formed with Cerberus, Fisher said.
In addition to the 64 hotels, Chatham won another group of five hotels with a bid of $195 million. Two other hotels will be turned over to lenders, according to court papers. Most of Innkeepers’ hotel portfolio is made up of extended-stay hotels, according to court papers.
Midland Loan Services, the special servicer of an $825 million mortgage loan, and Lehman filed objections to Innkeepers’ bankruptcy plan and later withdrew them under an agreement announced in court.
The case is In re Innkeepers USA Trust, 10-13800, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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