M Waikiki, Davidson Family Trust file joint Chapter 11 plan, statement

By Caroline Salls

Pittsburgh, Jan. 23 - M Waikiki LLC and the Davidson Family Trust filed a joint plan of reorganization and related disclosure statement for M Waikiki's Chapter 11 case Friday in the U.S. Bankruptcy Court for the District of Hawaii.

Treatment of creditors will include the following:

• Holders of non-tax priority claims and general unsecured claims will be paid in full in cash;

• Holders of secured tax claims for years before 2012 will either be paid in full in cash or receive the collateral securing the claim;

• Holders of secured claims for taxes in years 2012 and after will retain their rights to payment;

• Wells Fargo will receive a five-year plan note and plan mortgage on account of its secured claim. The plan proponents said Wells Fargo will receive a $2.5 million payment to be applied toward the principal amount of the secured claim on the effective date.

Interest on the plan note will be one-month Libor plus 225 basis points;

• The holder of the R.D. Olson secured claim will receive a $1.43 million cash payment. There will be no interest unless the plan does not take effect by June 1, in which case interest would accrue at 5% from June 1, 2011 until the claim is paid;

• The Marriott secured claim, which is disputed and subject to causes of action, will be paid in full in cash;

• The Davidson Trust will receive 77% of the new senior equity in the reorganized company on account of its secured claim;

• Holders of miscellaneous secured claims will either be paid in full in cash or receive the collateral securing the claim;

• The Aqua/Modern claim will be paid in full under several payment scenarios;

• If the Marriott unsecured claim is deemed to be subordinated to the Davidson Trust secured claim, M Waikiki will pay Marriott 100% of the subordinated amount, up to $6 million, plus 10% of the balance.

If the claim is not subordinated, it will be paid in full.

The Marriott payable will be made in $800,000 installments at 3.2% interest.

However, if the payable and interest are not paid in full 30 days after the closing of a sale to a non-affiliate of the company, the sale and exit financing proceeds will be applied toward the payable and the Aqua/Modern claim;

• The Davidson Trust will receive 5% of the new senior equity in the reorganized company in exchange for its unsecured claim; and

• The company's class A, class B and class C interest will be cancelled. Holders will receive a new class A, class B or class C note only if all allowed claims are paid in full.

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

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