(Updates with delay of hearing in first paragraph.)
Oct. 26 (Bloomberg) -- Jameson Inns Inc. affiliates filed for bankruptcy hours before a court hearing where Colony Capital LLC had planned to challenge the hotel chain’s strategy of reorganizing under court protection.
JER/Jameson GP LLC joined four other affiliates of James Inns in bankruptcy today in Wilmington, Delaware. The affiliates all hold debt related to Jameson Inns hotels. Jer/Jameson listed assets and debt of between $100 million and $500 million each.
Colony Capital, which is owed more than $40 million by one of the affiliates, is seeking to dismiss the first Jameson- related bankruptcy filed on Oct. 18. Colony claimed in court papers the filing by JER/Jameson Mezz Borrower II LLC was a pretext to prevent Colony from seizing and selling its assets.
The bankruptcy “does nothing more than hinder and delay the Colony JIH Lenders,” Colony said in court papers.
The five Jameson affiliates began filing bankruptcy last week after defaulting on loans and becoming the subject of lawsuits filed earlier this year in New York by Colony, according to court documents. Colony wants to auction the Jameson assets that were put up as collateral for the loan.
U.S. Bankruptcy Judge Mary Walrath today put off until Nov. 22 a hearing to decide whether the Jameson affiliates can remain in bankruptcy, which would prevent Colony from selling the assets.
Jameson Inns, based in Smyrna, Georgia, operates more than 100 hotels in the Southeast and Midwest of the U.S. One affiliate of Jameson runs the hotels, while others, like the bankrupt units, hold debt and own the hotels. All of the affiliates are units of Argila LLC, according to an organization chart filed as part of the bankruptcy case.
The five bankrupt affiliates each have separate boards of directors, bankruptcy attorney Laura Davis Jones said in an interview today. Her firm, Pachulski, Stang, Ziehl & Jones, LLP was hired by all five of the bankrupt affiliates.
The lead bankruptcy case is In re JER/Jameson Mezz Borrower II LLC, 11-13338, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Bill Rochelle in New York. Editor: Fred Strasser
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