Holiday Inn Manhattan files Chapter 11 following receiver appointment

By Sarah Lizee

Olympia, Wash., Nov. 29 – Golden Seahorse LLC, which does business as Holiday Inn Manhattan Financial District, filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Tuesday.

The debtor operates a full-service, 491-room Holiday Inn hotel in Manhattan and also owns an adjacent property where it leases the space to a restaurant.

In 2018, the debtor obtained a $137.2 million loan due 2028 from Ladder Capital Finance LLC, split into four tranches. Currently, three tranches amounting to about $87 million are held by Wilmington Trust, NA, and the other $50 million tranche is held by Hi Fidi B Note Owner LLC, an affiliate of Triangle Capital Group LLC.

The non-default interest rate under the loan is 5.259%, equating to about $620,000 per month.

The debtor said that as a direct result of the Covid-19 pandemic, it defaulted on the loan. After that, Wilmington Trust swept all of the debtor’s funds in a separate cash management account that included sales taxes due to the state and occupancy taxes due to the city.

The debtor said it tried to reach a consensual resolution with Midland Loan Services, the special servicer to Wilmington Trust, but in March, Midland started an action to foreclose on the mortgage, appoint a receiver and enjoin the debtor from taking certain actions.

In September, the motion to appoint a receiver was granted, though Wilmington Trust’s request for injunctive relief was denied.

“Faced with the prospect of a complete loss of equity and value as well as the potential loss of rights under various contracts and licenses as a result of the appointment of the receiver, the debtor determined that Chapter 11 was necessary to preserve the debtor’s business and maximize value for all creditors and constituents,” the company said in court documents.

The debtor said it is hoping to restructure the loan or confirm a plan of reorganization.

“The hotel’s operations have greatly improved over the last six months and the hotel’s occupancy rate was approximately 92% in September 2022 and approximately 90% in October 2022 with an [average daily rate] of over $200,” the company said.

The company has filed a motion seeking court approval to use the cash collateral of Wilmington Trust, NA.

In its petition, the debtor listed $100 million to $500 million in assets and $100 million to $500 million in liabilities.

The company is represented by Tarter Krinsky & Drogan LLP.

The New York-based hotel operator filed Chapter 11 bankruptcy under case number 22-11582.

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