Holiday Inn Manhattan’s plan confirmation hearing adjourned to May 7

By Sarah Lizee

Olympia, Wash., Feb. 29 – Golden Seahorse LLC, which does business as Holiday Inn Manhattan Financial District, had the hearing on confirmation of its Chapter 11 plan adjourned to May 7, according to an order filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

As background, 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.

The plan is premised on either a cure and reinstatement of the $137.03 million loan held by Wilmington Trust and HI FIDI B Note Owner LLC, or a recasting and modification of the loan and the issuance of a new note in the allowed amount of the claim less the $10 million payment on the effective date.

In a decision made by the bankruptcy court on July 31, the court held that in order for the debtor to reinstate the loan without affording Wilmington Trust the right to vote for or against the plan, the debtor is required to pay the default interest which Wilmington Trust asserts is at least $18 million and, if the court permits, post-petition interest at the default rate, which could be as much as $29 million.

The debtor is exploring options to raise the funds required to reinstate the loan, but at the debtor’s sole option, the plan provides for a modification and recasting of the loan and the issuance of the new note, which will entitle Wilmington Trust the right to vote for or against the plan.

Under the plan, administrative claims will be paid in full in cash.

On the effective date, Wilmington Trust will receive, at the election of the debtor, either: reinstatement of the principal amount of its allowed claim plus payment in full in cash of all accrued interest at the default rate under the note and all reasonable fees and ancillary expenses required to be paid through the effective date; or at the debtor’s option, the loan will be modified and recast via the new note.

If the debtor chooses the latter option, on the effective date, the debtor will pay $10 million, reducing the allowed amount of the loan. The balance will be modified and recast to a 10-year loan from the effective date at an interest rate of 6.5% simple interest, based upon a 30-year amortization.

The unpaid allowed amount of the loan will be due on the maturity date.

If after confirmation of the plan the property is sold prior to the maturity date, Wilmington’s claim will be paid in full from the sale proceeds.

Also, the debtor reserves the right to pay the Wilmington claim in full from the refinancing of the property, or otherwise, any time prior to the sale of the property with no prepayment fee or penalty.

For priority tax claims, 100% of the allowed claims will be paid over three years from the effective date in quarterly installments at the statutory rate of interest. If the property is sold, the claim will be paid in full from the sale proceeds.

Holders of general unsecured claims will be paid in full without interest no later than one year from the effective date. On the effective date, all holders will receive 50% of their claims in cash and the remaining 50% will be paid in cash six months from the effective date. If the property is sold within six months of the effective date, the claims will be paid with any remaining unpaid amount of their distributions from the sale proceeds.

Equity interest holders will not receive anything, unless the property is sold, in which case they will receive the net sale proceeds after payment of all administrative claims and higher priority classes are paid in full.

The New York-based hotel operator filed Chapter 11 bankruptcy on Nov. 28, 2022 under case number 22-11582.

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