San Jose Fairmont disclosure statement draws objection from committee

By Sarah Lizee

Olympia, Wash., May 10 – FMT SJ LLC and SC SJ Holdings LLC’s, which own the San Jose Fairmont Hotel in California, official committee of unsecured creditors objected to the company’s disclosure statement for its Chapter 11 plan of reorganization, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

“The debtors’ request for approval of the disclosure statement and commencement of the plan approval process is premature and should be denied,” the committee said in its objection.

“While the Chapter 11 cases are advancing, material issues remain unresolved. Until such issues are resolved, the disclosure statement will not contain adequate information for creditors voting on the plan.”

The committee said that the debtors adjourned to May 17 the disclosure statement hearing that was previously scheduled for April 29, presumably recognizing that the disclosure statement provided “only a conceptual framework” for a restructuring.

“The disclosure statement was missing the most basic information a voting creditor would need to consider, such as what FMT unsecured creditors would receive under the plan,” the committee said.

“Other foundational details necessary to the plan, such as the identity of the debtors’ new brand manager and the sources and uses of the financing that purportedly will fund the Chapter 11 exit, were also not available to creditors.

“Unfortunately, the infirmities that plagued the disclosure statement have not been remedied.”

The committee said that near term events, such as mediation regarding Accor’s claim, and the potential negotiation of a new hotel management agreement and financing from a brand partner, should provide more clarity.

“The debtors, however, seem intent on rushing forward without this information, which clearly is crucial to any party’s understanding of the plan,” the committee said.

The San Jose, Calif.-based hotel owner filed bankruptcy on March 5 under Chapter 11 case number 21-10521.

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