Marriott submits Chapter 11 plan of reorganization for M Waikiki

By Jim Witters

Wilmington, Del., Feb. 27 - Marriott International, Inc. and Marriott Hotel Services, Inc. filed a plan of reorganization for M Waikiki LLC and its associated disclosure statement on Monday with the U.S. Bankruptcy Court for the District of Hawaii.

The filing came four days after the court terminated M Waikiki's exclusive period for soliciting votes on its plan of reorganization.

The competing plans revolve around control of the Modern Honolulu hotel, an 18-story, 353-room hotel in Honolulu.

Marriott's plan

Under the proposed plan, Marriott would buy the estate's assets.

Specifically, the proponents intend to transfer an amount sufficient to fund the plan and the release of the Marriott secured and unsecured claims.

In exchange for the funding, the estate would transfer all its assets to Marriott, including claims brought by the estate before the bankruptcy court or otherwise.

The Marriott plan provides for payment in full in cash of allowed claims for all classes, except equity interests, according to the plan's associated disclosure statement.

Equity interests will be extinguished and receive no distribution under the plan.

Cash consideration for the Davidson Trust indebtedness will be set aside pending resolution of the Davidson loan dispute.

If Marriott is not the successful purchaser, Marriott will not waive or release its secured or unsecured claims.

If Marriott is the successful bidder, the reorganized debtor will manage the hotel exclusively and retain title, ownership, possession and control.

Settlements

The Wells Fargo secured claim has been settled between Wells Fargo and the plan proponents, granting Wells Fargo an allowed claim of $104 million. Payment is to be made by July 31.

The settlement represents an estimated 91% recovery for Wells Fargo.

The holder of the R.D. Olson secured claim has agreed to an allowed a claim of $1.43 million, with 5% annual interest from June 1, 2011 until it is paid in full, if it is not paid in full by June 1, 2012.

The settlement represents an estimated 78% recovery for the holder of the R.D. Olson claims.

Other estimated claims

Marriott's secured and unsecured claims total $73.1 million, according to the disclosure statement.

The David Trust secured claims amount to $15 million.

General unsecured claims are estimated to be $1.54 million.

Unsecured non-priority claims total about $2 million.

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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