Eagle Hospitality shareholders object to bid procedures for hotels

By Sarah Lizee

Olympia, Wash., March 22 – Eagle Hospitality Real Estate Investment Trust unit EHT US1, Inc.’s bid procedures for 15 of its hotels drew an objection from an informal group of equity holders, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The group claims 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 a an expedited motion seeking approval of a proposed sale process and stalking horse bid from Madison Phoenix LLC, an affiliate of debtor-in-possession lender Monarch Alternative Capital LP.

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

“The DIP lender has, in other words, manufactured an ‘emergency’ that does not otherwise exist and is inconsistent with case expectations – expectations it helped create when it negotiated the DIP loan,” the group said.

“To any outside observer, this is just the kind of over-reach that bears the hallmarks of a ‘rigged’ process where the ‘inside-creditor fix is in.’”

The informal group noted that it has filed a motion with the court seeking formation of an official equity committee.

The shareholders said the court should deny the sale motion, which 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.

A hearing on approval of the bid procedures is scheduled for March 23, as previously reported.

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.

© 2015 Prospect News.
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