M Waikiki seeks interim and final approval of amended credit facility

By Jim Witters

Wilmington, Del., Jan. 3 - M Waikiki LLC requested court approval of a $9 million debtor-in-possession credit facility, according to documents filed Sunday with the U.S. Bankruptcy Court for the District of Hawaii.

The original DIP request was for $2.5 million and was adjusted in December to $3.05 million.

"This financing commitment, which is inclusive of the $3.05 million that the court previously authorized the debtor to borrow, will provide the debtor with sufficient liquidity to pay post-petition operating expenses, necessary capital expenditures and the debtor's other anticipated Chapter 11 administrative expenses through the effective date of the debtor's forthcoming plan of reorganization," court documents state.

A hearing on the request is scheduled for Jan. 27.

Interim and final requests

On an interim basis, the debtor is seeking authority to borrow an additional $1.28 million to pay expenses deferring in 2011 while the amended DIP agreement was pending.

On a final basis, the debtor is seeking authority to borrow an additional $4.67 million to continue business operations, pursue a lawsuit against Marriott International Inc. and to pay for previously incurred capital expenses.

Marriott previously operated the 353-room hotel.

Changes in terms

In addition to the increases amount of the DIP facility, the debtors also are seeking an extended maturity date and a new default provision.

Under the proposed order, the maturity date will be April 30.

Termination of the debtor's exclusive period for filing a reorganization plan and associated disclosure statement on or after March 16 will constitute a default under the proposed DIP agreement.

Other terms of the DIP facility through the Davidson Family Trust remain unchanged.

Progress with the reorganization

Since the Chapter 11 filing four months ago, the debtor "has made substantial progress in its efforts to reorganize," including stabilizing the operating losses of its principal asset, the Modern Honolulu hotel, the documents state.

The debtor has secured the support of its DIP lender for a plan of reorganization expected to be filed before Jan. 20, the documents state.

The debtor expects to pay in full or reach agreement on treatment of its prepetition and post-petition secured debt and payment of allowed trade claims on the effective date of the plan, according to court documents.

The DIP lender expects to allow for assumption of the credit facility, rather than repayment, on the plan effective date, the documents state.

M Waikiki, a San Diego-based hotel investment company, filed for bankruptcy on Aug. 31. The Chapter 11 case number is 11-02371.

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