Extended Stay creditors seek termination of exclusivity, adjournment of disclosure hearing

By Lisa Kerner

Charlotte, N.C., June 16 - Extended Stay Inc.'s official committee of unsecured creditors asked the court to terminate the debtors' exclusive periods to file a plan of reorganization and solicit acceptances.

In addition, the committee wants the court to adjourn the disclosure statement hearing relating to the debtors' fifth amended plan of reorganization, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Extended Stay's most recent plan is based on a plan sponsor agreement with CP ESH Investors, LLC.

The creditors committee said previously it believes the plan is not confirmable because the committee was recently approached by affiliates of Starwood Capital Group Global LP regarding an alternative plan funding proposal.

According to a prior court filing, the alternative plan would provide "hundreds of millions of dollars" in additional value for Extended Stay's estates and creditors as well as a "meaningful distribution" to some of the creditors holding $3.3 billion mezzanine facilities claims.

The creditors committee said the Starwood plan "is far and away superior" to the debtors' plan and Extended Stay's fifth amended plan "does not represent the highest and best alternative to all - as opposed to just the [secured creditors]."

Extended Stay said CP ESH Investors was selected as the high bidder at the company's auction for investment proposals, which was held May 27 and May 28.

CP ESH Investors is a newly formed entity owned by a consortium of investors consisting of Centerbridge Partners LP and Paulson & Co. Inc., on behalf of various investment funds and accounts they manage, and Blackstone Real Estate Partners VI LP, on behalf of itself and its parallel funds and related alternative vehicles.

Regarding the disclosure statement hearing, the committee believes the debtors' will argue that although the hearing was originally intended to consider the fourth amended disclosure statement, the fifth amended disclosure statement is similar enough that it should be heard on June 17.

The committee believes that terminating exclusivity and adjourning the disclosure statement hearing will ensure that "voting parties are able to make a meaningful and informed decision without one plan enjoying a head start."

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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