Bloomberg News

Innkeepers Allowed to Extend Control Over Bankruptcy Case

September 14, 2011

(Updates with lawyer’s comment in fourth paragraph.)

Sept. 14 (Bloomberg) -- Innkeepers USA Trust won approval to extend control over its bankruptcy case amid a dispute with Cerberus Capital Management LP and Chatham Lodging Trust over whether they will buy 64 of its hotels.

The new deadline to file a Chapter 11 plan will be Nov. 10 once a formal order is submitted, U.S. Bankruptcy Judge Shelley Chapman said today in Manhattan. Innkeepers scaled back a request to extend control to Jan. 19, saying it would revisit the issue Nov. 9 if needed.

The operator of 71 hotels, including Residence Inns, Marriott hotels and Hampton Inns, received court approval of a plan in June, before Cerberus and Chatham sought to cancel their purchase citing a change in market conditions or Innkeepers’ business. Innkeepers sued, saying there has been no such change since reaching the binding agreement May 16.

Cerberus and Chatham haven’t yet disclosed what the change is, Daniel Donovan, a lawyer for Palm Beach, Florida-based Innkeepers, told Chapman today. Innkeepers is still in the investigation stage of its lawsuit against the firms, he said.

Innkeepers, whose parent is managed by an affiliate of Leon Black’s private-equity firm Apollo Global Management LLC, filed for bankruptcy in July 2010 with a pre-arranged reorganization plan proposed by Apollo and Lehman Ali, a unit of bankrupt Lehman Brothers Holdings Inc. Creditors rejected that plan.

The case is In re Innkeepers USA Trust, 10-13800, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, Andrew Dunn

To contact the reporter on this story: Tiffany Kary in New York at

To contact the editor responsible for this story: John Pickering at

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