M Waikiki, Davidson plan votes tabulated; Marriott, Wells Fargo reject

By Jim Witters

Wilmington, Del., May 18 - The joint plan filed by M Waikiki LLC and the Davidson Family Trust received support from all classes of voters but was rejected by Marriott International, Inc. and Wells Fargo, according to documents filed on May 17 with the U.S. Bankruptcy Court for the District of Hawaii.

The second amended joint plan proposed by the debtor and the Davidson Family Trust and a plan of reorganization filed by Marriott are competing for votes among M Waikiki's creditors.

The joint plan confirmation hearing is scheduled to begin on June 1.

M Waikiki plan

Kathryn Tran, senior consultant at XRoads Solutions Group, certified the results of the voting on the debtors' plan.

• The holder of the Wells Fargo secured claim voted to reject the plan. The vote represents 100% of the voters in class 3 and 100% of the $115.8 million in value;

• The holder of the R.D. Olson secured claim voted to accept the plan. The vote represents 100% of the voters in class 4 and 100% of the $1.84 million in value;

• The holder of the Davidson Trust secured claim voted to accept the plan. The vote represents 100% of the voters in class 6 and 100% of the $15 million in value;

• The two holders of Aqua/Modern claims voted to accept the plan. The votes represent 100% of the voters in class 9 and 100% of the $2 in value;

• The holder of the Marriott unsecured claim voted to reject the plan. The vote represents 100% of the voters in class 10 and 100% of the $38.8 million in value;

• The holder of the Davidson Trust unsecured claim voted to accept the plan. The vote represents 100% of the voters in class 11 and 100% of the $845,000 in value; and

• The holders of class A, class B and class C interest in the debtor voted to accept the plan. The votes represent 100% of the voters in classes 12, 13 and 14 and 100% of the value. No value was listed for those classes.

Treatment of creditors

Under the M Waikiki and Davidson Family Trust plan,

• Wells Fargo will receive a cash payment of $20 million and a five-year note on its secured claim of $114.9 million. Interest on the note will be either 4.5% through the second anniversary of the plan effective date and 5.5% thereafter or Libor plus 300 basis points for the duration of the note, with a 5.1% floor.

• If Marriott votes to accept the debtor's plan, Marriott's unsecured claim will be paid in full.

If Marriott votes to reject the plan or does not withdraw its competing plan, and the claim is deemed to be subordinate to senior claims, the debtor will pay up to $6 million plus 10% of the balance due.

If Marriott's claim is deemed non-subordinate to senior claims, the debtor will pay 100% of the allowed claim up to the amount in the Marriott reserve plus $800,000 a year until the balance is paid. Interest will be 3.2%.

• 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;

• 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;

• 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 canceled. 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, 2011. The Chapter 11 case number is 11-02371.

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