Information for Creditors of Eagle Hospitality Trust
Jointly Administered Under Case Number 21-10036 in the United States Bankruptcy Court for the District of Delaware
DEBTORS AND THEIR HOTELS
- 5151 Wiley Post Way, Salt Lake City, LLC (Doubletree – Salt Lake City, UT)
- ASAP Cayman Atlanta Hotel LLC
- ASAP Cayman Denver Tech LLC
- ASAP Cayman Salt Lake City Hotel LLC
- ASAP Salt Lake City Hotel, LLC
- Atlanta Hotel Holdings, LLC
- CI Hospitality Investment, LLC
- Eagle Hospitality Trust S1 Pte. Ltd.
- Eagle Hospitality Trust S2 Pte. Ltd.
- EHT Cayman Corp Ltd.
- EHT US1, Inc.
- Sky Harbor Atlanta Northeast, LLC (Hilton – Atlanta, GA)
- Sky Harbor Denver Holdco, LLC
- Sky Harbor Denver Tech Center, LLC (Sheraton – Denver, CO)
- UCCONT1, LLC (Holiday Inn – Orlando, FL)
- UCF 1, LLC (Embassy Suites – Anaheim, CA)
- UCHIDH, LLC (Holiday Inn – Denver, CO)
- UCRDH, LLC (Renaissance – Denver, CO)
- Urban Commons 4th Street A, LLC (Four Points – San Jose)
- Urban Commons Anaheim HI, LLC (Holiday Inn – Anaheim, CA)
- Urban Commons Bayshore A, LLC (Holiday Inn – San Mateo, CA)
- Urban Commons Cordova A, LLC (Sheraton – Pasadena, CA)
- Urban Commons Danbury A, LLC (Crowne Plaza – Danbury)
- Urban Commons Highway 111 A, LLC (Embassy Suites – Palm Desert, CA)
- Urban Commons Queensway, LLC (Queen Mary Long Beach)
- Urban Commons Riverside Blvd., A, LLC (Westin – Sacramento, CA)
- USHIL Holdco Member, LLC
DEBTORS WILL BATTLE WITH FORMER INSIDERS
This bankruptcy case was filed because of the mismanagement of the Debtors, stemming back to 2019. Although the hospitality industry is undoubtedly being strongly impacted by COVID-19, the Debtors’ troubles started long before the pandemic began. Under former management, the Debtors were misguided, caused to enter into arrangements with hotel management companies and lessees that were not in the Debtors’ interest, and put millions of dollars into debt that the Debtors would not have otherwise incurred.
Based on the declaration of the Debtors’ Chief Restructuring Officer (“CRO”), the Debtors filed bankruptcy after ousting their former management on December 30, 2020. Their goal in bankruptcy is to recover their properties from the control of those former insiders, try to recover funds wrongfully taken by those former insiders, and sell the Debtors’ properties in a value maximizing way. The Debtors have not ruled out reorganizing, but believe that selling their assets is the most likely option going forward.
In the CRO’s declaration, the Debtors disclose their belief that they have approximately $779 million in assets as compared to $630 million in liabilities. However, the Debtors have also asked for permission to incur up to another $125 million in senior secured debt in order to fund their bankruptcy case. If approved, the Debtors’ debt load would almost match their asset value.
LIKELY OUTCOME FOR CREDITORS
It is always hard to impossible to predict the outcome of bankruptcy cases for creditors. For that reason, among many others, it is recommended that all creditors make their voices heard in the Court proceedings. In Chapter 11 cases, the quiet ones are often forgotten. Those who raise a fuss and make their voices heard are the ones who typically come out ahead. Unsecured creditors must make their voices heard, too.
Success for creditors in this case likely depends on how the Debtors’ litigation with their former insiders, Taylor Woods and Howard Wu, progresses. According to the Debtors’ CRO, the Debtors will seek to avoid certain debts held by Woods and Wu, shed some creditors who would never have held claims if it were not for the wrongful conduct of Woods and Wu, and even potentially recover money that Woods and Wu wrongfully filtered out of the Debtors. Some funds the Debtors may attempt to recover include a PPP loan taken in the name of the one of the Debtors that was delivered to a bank account that the Debtors do not control.
If the Debtors are ultimately successful against Woods and Wu, they will have more liquidity available to repay unsecured creditors. This is why unsecured creditors should get involved in the case early. By acting as a group, called a “committee” in bankruptcy terms, unsecured creditors can influence and assist the Debtors in going after the former managers. They could ensure that the Debtors do not settle for an amount less than they should. A committee can be the voice of all unsecured creditors and can work towards increasing the amount creditors recover.
PRLT does not represent Eagle Hospitality Trust or any of their affiliated Debtors. The content on this page is provided for informational purposes only. Nothing on this page or this website creates an attorney/client relationship between you and PRLT. Nothing on this page is legal advice. If you have any questions about the Eagle Hospitality Trust jointly administered bankruptcy case or anything discussed on this page, please contact us.