Eagle Hospitality bid procedures for 15 hotels approved by court

By Sarah Lizee

Olympia, Wash., March 24 – Eagle Hospitality Real Estate Investment Trust unit EHT US1, Inc. received approval of the bid procedures for 15 of its hotels, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The company also received court approval of a stalking horse agreement with Madison Phoenix LLC, an affiliate of Monarch Alternative Capital LP and the debtors’ debtor-in-possession lender.

The stalking horse agreement provides for a total consideration for the assets of $470 million, as well as the assumption of assumed liabilities.

The agreement also provides for a 2% break-up fee and a $3 million expense reimbursement.

The bid deadline is 4 p.m. ET on May 14, an auction, if needed, will be held on May 20, and a sale hearing will be held on May 28.

As previously reported, an informal group of equity holders had objected to the bid procedures, and claimed that when the debtors initially filed bankruptcy, they cautioned against a hasty sale process.

“The pandemic environment has not been kind to the hospitality industry; had the company filed for bankruptcy one year ago, a quick sale might have been the debtors’ only option,” the shareholders said.

“But, the debtors filed only a few weeks ago and, with the national vaccine roll-out, March 2021 has a far different outlook than March 2020.”

However, six weeks after filing their petition, the debtors filed an expedited motion seeking approval of a proposed sale process and stalking horse bid from Madison Phoenix.

The shareholders had said the only rationale offered is that moving with greater speed is a term imposed by the proposed stalking horse bidder.

The group said denying the sale motion would afford the U.S. trustee overseeing the case an opportunity to consider the request for an official equity committee and, in turn, allow for a “more deliberative assessment” of the sale motion.

Singapore-based Eagle Hospitality owns a portfolio of corporate, leisure and airport hotels across the United States. U.S. affiliate EHT US1 filed Chapter 11 bankruptcy on Jan. 18 under case number 21-10036.

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