PWM Property lenders want exclusivity terminated, have plan ready

By Sarah Lizee

Olympia, Wash., March 8 – PWM Property Management LLC’s motion seeking an extension of its exclusive periods to file and solicit votes on a Chapter 11 plan drew an objection Monday from a group of mezzanine lenders and preferred equity holder 245 Park Member LLC, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company asked the court to extend the plan filing period through June 28 from Feb. 28 and the solicitation period through Aug. 27 from April 29.

“These Chapter 11 cases were commenced solely to provide the debtors with time and optionality for the debtors’ ultimate parent, HNA Group,” the lenders said in their objection.

The group claims HNA is the only stakeholder that benefits from delaying emergence in hopes that impacted creditors will pay it to avoid further destruction of value.

The lenders added that the debtors haven’t serviced any of their funded debt, other than their mortgage debt, and have made no progress towards identifying a path to emergence.

“Any plan proposed by the debtors at this point will be incapable of confirmation because they do not currently have the support of the mezzanine lenders,” the group said.

“Courts in this district have held that, absent substantive consolidation, each debtor in jointly administered Chapter 11 cases must have its own impaired accepting class to satisfy the requirements of section 1129(a)(10) of the bankruptcy code – and, as this court knows, the mezzanine lenders are the only creditors of their respective debtor borrowers.”

The lender group also said that no complications or contingencies exist that might lead a Chapter 11 debtor to justifiably request more time to formulate a plan.

“While the debtors spent four months doing next to nothing in terms of making progress towards emergence, the movants worked together on a Chapter 11 plan that can be implemented and confirmed immediately,” the group said.

The lenders said their plan creates certainty for all of the debtors’ creditors and preserves optionality for the debtor’s ultimate parent, the HNA Group.

A hearing on the exclusivity extension is scheduled for March 24.

The lender group said that if the extension is denied, the group will file its plan immediately.

New York-based PWM is a property management company. It filed Chapter 11 bankruptcy on Oct. 31 under case number 21-11445.

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