Extended Stay: bankruptcy court confirms company's reorganization plan

By Lisa Kerner

Charlotte, N.C., July 20 - Extended Stay Inc.'s plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of New York at a hearing on Tuesday, according to an attorney close to the case.

As previously reported in June, the court approved an investment agreement with CP ESH Investors, LLC, 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.

The Centerbridge/Paulson/Blackstone investors offered to pay $3.925 billion in cash and to contribute certificates representing interests in the $4.1 billion mortgage loan for the equity of reorganized Extended Stay.

The amount to be paid by the investors will be distributed to creditors under the plan.

Treatment of creditors will include:

• Holders of administrative claims, priority tax claims and priority claims will be paid in full in cash;

• Holders of mortgage facility claims will receive 100% of a cash distribution and investor certificates, which will be cancelled without any distribution;

• The holder of the ESA UD mortgage claim will receive a new mortgage note;

• Holders of mortgage facility deficiency claims, mezzanine facility claims and general unsecured claims will receive an interest in a litigation trust to the extent they are litigation trust beneficiaries;

• Holders of existing equity interests and other existing equity interests will receive no distribution; and

• Holders of various ESA trust certificates, borrower interests, properties interests, membership interests and partnership interests will retain those certificates and interests.

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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