Eagle Hospitality: Court denies BofA’s attempt to dismiss debtor cases

By Sarah Lizee

Olympia, Wash., June 1 – Bank of America’s motion to dismiss EHT US1, Inc. debtors Eagle Hospitality Real Estate Investment Trust, Eagle Hospitality Trust S1 Pte. Ltd. and Eagle Hospitality Trust S2 Pte. Ltd.’s bankruptcy cases was denied Tuesday by the U.S. Bankruptcy Court for the District of Delaware, according to an order.

BofA, which is Eagle Hospitality’s pre-petition administrative agent, had said the filings are “simply vehicles to try to transfer value from the U.S. estates to compensate professionals in Singapore,” as previously reported.

Eagle Hospitality said in an objection to BofA’s motion that the debtors had negotiated a stalking horse asset purchase agreement that would return, at a minimum, $470 million under a sale of the debtors’ assets while maintaining a flexible bidding procedures framework for the sale/plan process.

The framework allowed the debtors to sell their assets either under a section 363 sale or through a recapitalization or sale under a Chapter 11 plan if the debtors receive such a proposal.

On Friday, the company received court approval to sell 15 hotels to four purchasers, including to stalking horse bidder Madison Phoenix LLC, an affiliate of Monarch Alternative Capital LP and the debtors’ debtor-in-possession lender.

Eagle Hospitality said in its objection that the agent, which holds a claim for about $341 million, appeared to support the sale to the stalking horse bidder, as the transaction would result in a significant distribution to the agent and could potentially repay BofA in full.

“The agent’s dispute is with the transaction flexibility the debtors fought hard to maintain, as the agent asserts that ‘an efficient sale [is] imperative,’ that there is ‘no prospect’ of reorganizing the Singapore debtors, and that, therefore, their Chapter 11 cases should be dismissed,” the company said.

“Remarkably, the agent seems to paint itself as the victim, as if the Singapore cases and the Singapore debtors were foisted on it through Eagle Hospitality Group’s ‘byzantine architecture.’”

Eagle Hospitality called the agent’s move “perplexing,” because all of the Singapore debtors were obligors under the pre-petition credit agreement.

“Having failed in its bid to control these cases by becoming the debtors’ DIP lender – through a proposed financing that designated as borrowers the very debtor entities that are now the subject of the dismissal motion – or by objecting to the debtors’ selected DIP lender, the agent now seeks the dismissal of the Singapore cases,” the company said.

Eagle Hospitality said the dismissal motion, if successful, would foreclose the debtors’ ability to pursue a recapitalization or sale through a Chapter 11 plan process.

“That its true objective is to control the course of these Chapter 11 cases is further evident from the fact that the agent’s ‘concerns’ that the Singapore cases were filed in bad faith did not prevent the agent from including the Singapore debtors as obligors under its DIP proposal and were raised arose only after the debtors chose to proceed with a different DIP lender,” Eagle Hospitality said.

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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