Times Square Crowne Plaza’s Chapter 11 plan effective as of March 31

By Sarah Lizee

Olympia, Wash., April 3 – Times Square JV LLC’s Chapter 11 plan went into effect on Friday, according to a U.S. Bankruptcy Court for the Southern District of New York.

The plan was confirmed on March 21, as previously reported.

The basis for the plan is a restructuring support agreement entered into near the time of filing between the debtors, prepetition lender 1605 Broadway LLC and consenting stakeholders Vornado Capital Partners LP and Vornado Capital Partners Parallel, LP.

Lender 1605 Broadway is permitted Times Square access to its cash collateral on a consensual basis and agreed to provide post-petition financing so that the debtors could pursue either a sale of its New York mixed-use property or a restructuring.

Following a global settlement, the plan was recently amended so that it now provides a significant recovery for all general unsecured creditors, instead of just those designated by the debtors as ongoing trade creditors.

Through the global settlement, individuals who paid advance deposits for stays at the hotel will receive a 100% credit that can be used for future stays.

The distribution to ongoing trade creditors has been materially improved as well.

And, other general unsecured creditors, who would have received nothing under the plan under the restructuring as originally proposed, will now receive their pro rata share of a $625,000 cash pool.

The global settlement was made possible by a related settlement between the debtors and InterContinental Hotels Group Resources, Inc. (IHG), under which IHG has agreed to waive all of its prepetition and potential rejection damages claims, ensuring that recoveries under the plan to other unsecured creditors will not be diluted.

Litigation between IHG and the debtors had been going on since before the petition date.

Detailed creditor treatment

Holders of the class 3a mortgage lender secured claims will receive, if a payout event occurs, a pro rata share of the mortgage lender secured cash payment. If a payout event doesn’t occur, holders will receive their portion of an exit facility in an amount equal to the outstanding debt of Times Square JV under the mortgage loan, taking into account the equitization of the mortgage loan, and a pro rata share, together with holders of DIP claims, of the reorganized equity interests.

Class 3b mortgage lender claims will be canceled with no distribution.

Holders of class 3c mortgage lender claims will receive, if a payout event occurs, a pro rata share of the mortgage lender secured cash payment. If a payout event doesn’t occur, holders will receive a portion of the exit facility in an amount equal to the outstanding obligations of 1601 Broadway Owner LLC under the Walber Parcel mortgage loan.

Holders of class 4a ongoing trade claims will receive, if a payout event occurs, a pro rata share of the net sale proceeds at Times Square JV. If a payout event doesn’t occur, holders will receive 50% of their pro rata share of the $975,000 ongoing trade claim cash pool, and the right to payment of the remaining 50% no later than six months after the effective date.

Holders of class 4b ongoing trade claims will receive, if a payout event occurs, their pro rata share of (together with holders of class 5b and class 6 claims) of net sale proceeds at CPTS Hotel Lessee LLC. If a payout event doesn’t occur, holders will receive 50% of their pro rata share of the ongoing trade claim cash pool and the right to payment of the remaining 50% no later than six months after the effective date.

Holders of class 4c claims will receive, if a payout event occurs, a pro rata share of the net sale proceeds at the applicable 1601 Broadway entity. If a payout event doesn’t occur, holders will receive 50% of their pro rata share of the ongoing trade claim cash pool, and the right to payment of the remaining 50% no later than six months after the effective date.

Regarding class 4a, 4b and 4c claims, if an objection has been filed with respect to any ongoing trade claim, the holder may not receive their pro rata share of the cash pool until the later of the effective date and the date that is 10 business days after the date the claim is allowed.

Holders of class 5a other unsecured claims will receive, if a payout event occurs, a pro rata share of the net sale proceeds at TSJV. If no payout event occurs, holders will receive 50% of their pro rata share of the $625,000 other unsecured claim cash pool and the right to payment of the remaining 50% no later than six months after the effective date.

Holders of class 5b other unsecured claims will receive, if a payout even occurs, a pro rata share (together with holders of class 4b and class 6 claims) of the net sale proceeds at CPTS. If no payout event occurs, they will receive 50% of their pro rata share of the other unsecured claim cash pool and the right to payment of the remaining 50% no later than six months after the effective date.

Holders of class 5c other unsecured claims, if a payout event occurs, a pro rata share of net sale proceeds at the applicable 1601 Broadway entity. If no payout event occurs, they will receive 50% of their pro rata share of the other unsecured claim cash pool and the right to payment of the remaining 50% no later than six months after the effective date.

Holders of class 6 individual advanced deposit claims will receive, if a payout event occurs, their pro rata share (together with holders of class 4 b and class 5b claims) of net sale proceeds at CPTS. If no payout event occurs, each holder in this class will receive an individual advanced deposit credit in the amount of their claim. A holder can exercise and redeem their credit after the effective date, so long are there isn’t an objection to the claim.

Administrative expense and priority tax claims will be paid in full.

Other priority claims and other secured claims are unimpaired.

Intercompany interests will be either unimpaired or impaired, based on the claim.

And, equity interests will be extinguished.

Times Square JV owns the Crowne Plaza hotel in Times Square in New York. The company filed Chapter 11 bankruptcy on Dec. 28 under case filing number 22-11715.

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