The Wall Street Journal has reported that hotel operator Extended Stay is expected to ask the Manhattan bankruptcy court for a sign-off on its Chapter 11 restructuring plan tomorrow (Tuesday).
The plan is based on an investment deal with a consortium led by Centerbridge Partners LP, Paulson & Company. It would transfer ownership of the chain to the investors in exchange for $3.9bn, which would be used to repay the hotel group’s mortgage lenders, owed $4.1bn. The company’s unsecured creditors are owed $3bn but the US justice department believes that the litigation trust is likely to have little value because of a clause in Extended Stay’s Chapter 11 plan to shield its current owner David Lichtenstein from litigation. The plan may still face opposition from Extended Stay’s unsecured creditors, who were siding with Starwood Capital Group in a rival bid for the company.