Wardman Hotel: Court denies Marriott’s motion for further examination

By Sarah Lizee

Olympia, Wash., March 31 – Wardman Hotel Owner, LLC won’t have a Rule 2004 examination conducted at Marriott Hotel Services, Inc.’s request, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

Marriott had filed a motion on March 19 seeking a the examination, which would have provided for a deeper investigation into Wardman Hotel Owner’s finances.

Marriott claimed that Wardman Hotel Owner had refused to produce documents, which has led to additional time and expense needed to conduct sufficient discovery.

As previously reported, Wardman Hotel Owner received final court approval of an $8 million superpriority secured debtor-in-possession facility with Pacific Life Insurance Co., the company’s senior secured pre-petition lender and ultimate sole equity holder.

“Despite not having conducted any investigation of the pre-petition conduct of Pacific Life Insurance Co. beyond a cursory review of the validity, priority or enforceability of Pacific Life’s pre-petition liens, the debtor granted Pacific Life ... broad releases and waivers covering significant events, including the 2018 recapitalization transaction, any unknown transfers, and the events leading to the debtor’s insolvency and ultimate bankruptcy filing,” Marriott said in its motion.

Under the final DIP order, if the DIP stipulations are not challenged by the March 30 challenge deadline, they will become automatically binding on the estate and all third parties. Marriott had also sought to extend the challenge deadline to April 29.

“Not surprisingly, given that this case is largely a two-party dispute engineered for the sole benefit of Pacific Life, there is no official committee of unsecured creditors that would traditionally lead this investigation of the DIP stipulations,” Marriot said.

“Therefore, the burden and expense has fallen directly on Marriott to investigate these DIP stipulations for the benefit of the debtor’s bankruptcy estate.”

Washington, D.C.-based Wardman Hotel is the owner of a convention hotel, formerly operated as the Washington Marriott Wardman Park Hotel. The company filed Chapter 11 bankruptcy on Jan. 11 under case number 21-10023.

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