Williamsburg Hotel owner files new plan and lender’s alternative plan

By Sarah Lizee

Olympia, Wash., Nov. 29 – 96 Wythe Acquisition LLC, the owner of the Williamsburg Hotel in Brooklyn, N.Y., filed a third amended Chapter 11 plan of reorganization and related disclosure statement, and attached the term sheet for lender Benefit Street Partners Realty Operating Partnership, LP’s alternative plan, according to filings made Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

According to the amended disclosure statement, the plan will be implemented through a cash infusion of $9 million to be contributed from the plan sponsor, which is 96 Wythe New Acquisition LLC, of which $1.44 million will be allocated for a PPP settlement, as well as cash on hand, which the debtor anticipates will total about $3 million upon the effective date, for a total available cash upon the effective date projected at about $12 million.

The reorganized debtor will continue to operate from and after the effective date.

The plan sponsor’s cash infusion and the income generated by the reorganized debtor’s operations will be used to fund operating expenses and to pay the amounts necessary to fund the plan payments.

Administrative claims, priority tax claims, professional fee claims and priority claims will be paid in full.

As for Benefit Street’s claims, its undisputed claim will be allowed in the amount of $70.7 million. The debtor is disputing the balance of any claims held by Benefit Street, including a disputed claim. The lender asserts that it is owed at least $90 million.

Benefit Street’s undisputed claim and the balance of any additional allowed claim of the lender will be paid in full, together with monthly interest of 4.5% per annum for the first four years and 5% for the next two years. After that, the debtor will make a final payment consisting of the balance of the undisputed claim.

The reorganized debtor will contribute $3 million into an interest account to serve as an interest reserve for its payments on account of the lender’s undisputed claim.

Upon a final order adjudicating Benefit Street’s disputed claim or by written agreement between the debtor and Benefit Street, 96 Wythe will make additional distributions to Benefit Street.

The secured property tax claims will be paid under a property payment plan until paid in full.

The company will pay secured M&M claims and unsecured claims in full in two installments, with half paid on the effective date and the remainder paid 180 days after the effective date.

Subordinated claims will not receive any distribution.

Equity interests will be canceled. The plan sponsor will be issued new interests in the reorganized debtor, constituting 100% ownership. The mezzanine lender, WH Mezz Lender, LLC, will receive new interests junior to the new interests issued to the plan sponsor and to any sources of new equity provided to the reorganized debtor.

Alternative plan

Benefit Street said that its alternative plan would provide for a full recovery to creditors holding allowed claims, assuming the accuracy of the debtor’s representations of the amounts of allowed claims in the disclosure statement. The lender said it would make a payment of $10 million to fund creditors’ recoveries.

The alternative plan provides for an orderly going-concern sale of the debtor’s hotel and related property, conducted by an independent fiduciary as plan administrator and real estate broker.

Under proposed bid procedures for the hotel and related property, Benefit Street would serve as stalking horse bidder with a baseline credit bid for up to the full amount of its allowed claim.

Administrative expense, priority claims, secured property tax claims and secured M&M claims would be paid in full.

Benefit Street’s claim would either be paid by closing on the purchase of the assets, or payment in cash from sale proceeds following closure of a sale to a third-party purchaser.

Holders of general unsecured claims would receive their pro rata share of the remaining plan funding, and, if applicable, the remaining asset sale proceeds.

Holders of subordinated claims and equity interests would receive no recovery, unless the results of the auction provide for the payment in full of all other creditor claims, including post-petition interests.

The Brooklyn, N.Y.-based hotel owner filed bankruptcy on Feb. 23, 2021 under Chapter 11 case number 21-22108.

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