Innkeepers USA files for extension of exclusive period to mid-January

By Jim Witters

Wilmington, Del., Aug. 31 - Innkeepers USA Trust and its affiliates are seeking extensions for filing a Chapter 11 plan and soliciting votes on that plan, according to documents filed Wednesday in the U.S. Bankruptcy Court for the Southern District of New York.

The debtors said the extension is needed following the decision by Cerberus Series Four Holdings LLC and Chatham Lodging Trust to terminate their commitment to buy 64 hotels from Innkeepers for $1.12 billion. Innkeepers has sued Cerberus and Chatham for breach of contract.

Because Cerberus and Chatham are seeking to terminate their commitments, the debtors are required to take precautions to ensure the Chapter 11 cases "continue to be administered in an efficient manner," the documents stated.

Innkeepers is seeking an extension of the exclusive filing period through Jan. 19 and the exclusive solicitation period through March 19. The exclusive period for filing a plan is scheduled to expire Oct. 1.

The filings also seek changes to the plan confirmed in June.

The debtors are seeking to exclude Chatham and Cerberus from the right to agree to extend the date on which the fixed/floating plan would be nullified and the confirmation order would be automatically revoked beyond Sept. 15. Currently, Chatham and Cerberus must agree to any extension. The fixed/floating plan includes the sale that Cerberus and Chatham hope to terminate.

"Nevertheless, the fixed/floating debtors may still be able to consummate the fixed/floating plan with certain modifications and the consent of their major stakeholders," the documents stated. "The requested modifications would allow the debtors more time ... to develop a new restructuring strategy for the fixed/floating debtors, and could eliminate the need to resolicit votes and reopen the confirmation hearing for an immaterially modified plan of reorganization."

Also, the debtors want to modify the confirmed plan to delineate that the non-effective remaining debtors can consummate the remaining debtor plan without being required to transfer any assets related to the fixed/floating debtors to the liquidation trust.

This change would allow the remaining debtors to complete the remaining debtor plan immediately, the documents stated.

"If the confirmed plan is not modified and the remaining debtor plan went effective before the fixed/floating plan, the trustee for the liquidation trust would inherit the responsibility of managing the fixed/floating debtors and their restructuring. Correspondingly, the board of Innkeepers USA Trust would lose its authority to do so because Innkeepers USA Trust would no longer be the indirect owner of any of the fixed/floating debtors," according to the filings.

This clarification "will help ensure that none of the remaining debtors will bear the continued costs of administering the fixed/floating debtors' Chapter 11 cases," the documents state.

Innkeepers USA, a Palm Beach, Fla., hotel real estate investment trust, filed for bankruptcy on July 19, 2010 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 10-13800.

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