Preservation of Owners Equity Through A Chapter 11 Filing of Holiday Inn JFK International Airport Jamaica, NY & Crowne Plaza LaGuardia Airport East Elmhurst, NY
The Client
Dilworth Paxson LLP
The Mandate
Two full service hotels, namely the 360 room Holiday Inn JFK International Airport and the 358 room Crowne Plaza LaGuardia Airport were financed via triple tax exempt bonds in the amount of $35 million and $50 million respectively. The bonds were publicly traded and held by various institutional mutual funds. Shortly after September 11, 2001 the properties performance began to falter and by mid 2003 the debt service reserve had been depleted and the properties were on the verge of default. During 2004, the bonds were auctioned and acquired by a conglomerate of hedge funds for roughly 70% of face value. The new bond holders intended to foreclose on and renovate the assets, with an ultimate goal to sell the properties and achieve significant returns on their investment. Upon the new bond holders having a receiver appointed, ownership defensively filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in an effort to protect its equity in the assets. The bankruptcy case was a highly contested as the new bond holders business plan was to own the properties as opposed to having its debt serviced.
The Results
- Managed all U.S. Trustee filings and reporting
- Implemented property cash budgeting, reporting procedures, and proformas
- Acted as liaison between client, property management, bond holders and the U.S. Trustees Office
- Provided expert testimony concerning local market conditions and hotel operations
- Provided rebuttal witness to bond holder expert witnesses
- Participated in the development of a plan of reorganization which included an auction of the Holiday Inn JFK International Airport
- “I have used Dan Lesser for many years for valuation analysis in hotel cases. He always provides a timely, well written and well researched work product and is unflappable in the courtroom. I have similar experience with his colleague, Gary Isenberg, in the field of hotel operations. He is very knowledgeable, well prepared and a very polished witness. I want this skill set on my team and always act promptly to get it so that (as happened recently) they don’t show up on the other side of a case.” – Lawrence G. McMichael – Firm Co-Chairman – Dilworth Paxson LLP
