Extended Stay granted court approval of investment bid procedures

By Caroline Salls

Pittsburgh, April 23 - Extended Stay Inc. received court approval to hold an auction for investment proposals, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the bid procedures, all proposals are due by 3 p.m. ET on May 17 and must include a $150 million deposit.

The company will select qualified bidders by May 24 and will notify those parties by May 25. The auction will be held on May 27.

If no bids other than the Centerbridge/Paulson stalking horse bid are received, the auction will not be held, and a hearing on approval of the proposal will be held on June 17.

If the revised plan related to the investment agreement is terminated because the company selects an alternate proposal, the winning bidder will be entitled to liquidation damages in the amount of 10% of the total enterprise value of the bid, as well as reimbursement of up to $10 million in expenses.

Extended Stay, a New York-based owner and operator of mid-priced extended stay hotels, filed for bankruptcy on June 15, 2009. Its Chapter 11 case number is 09-13764.

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