MSR Resort seeks rejection of Marriott owner, management agreements

By Jim Witters

Wilmington, Del., Nov. 7 - MSR Resort Golf Course LLC is seeking to terminate the owner and management agreements with Marriott International, Inc. at the Doral Golf Resort & Spa in Miami as part of its effort to sell Doral, according to documents filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

The motion includes a request for an order estimating the damages MSR may incur by rejecting the Marriott agreements.

A hearing on the motion is scheduled for 2 p.m. ET on Nov. 16.

As previously reported, Trump Endeavor 12 LLC is the stalking horse bidder in a $170 million deal for the Doral property.

The purchase agreement does not call for assumption of the Marriott management agreement or owner agreement.

The management agreement is between Marriott International, Inc. and CNL Resort Lodging Tenant Corp., predecessor to debtor MSR Resort Lodging Tenant Corp. The owner agreement is between Marriott, MSR Resort Lodging Tenant Corp., CNL Resort Hotel, LP and CNL Resort Silver Properties, LP for management services at Doral.

If the company finds that rejection of the Marriott agreements will have a significant detrimental effect on the sale proceeds, it might terminate the Trump purchase agreement.

MSR said it is also free to consider competing bids during the marketing period from potential buyers who would retain Marriott as a franchisor or resort manager.

Trump can terminate the purchase agreement at any time before the Nov. 28 expiration of its due diligence period.

In the Nov. 7 motion, the debtors state that every bid received so far "has required the rejection of the Marriott management agreement and owner agreement."

"Although the debtors have engaged Marriott in discussions regarding the potential rejection damages claim, the parties have been unable to reach a settlement. The debtors and their advisors, including their hospitality advisor Warnick & Co., have performed extensive analysis and believe that Marriott's rejection damages will not exceed $10 million," the motion states.

MSR Resort owns and operates five resorts, including the Grand Wailea Resort Hotel & Spa in Maui, Hawaii; the La Quinta Resort & Club and PGA West in La Quinta, Calif.; the Arizona Biltmore Resort & Spa in Phoenix; the Doral Golf Resort & Spa in Miami; and the Claremont Hotel Club & Spa in Berkeley, Calif.

The New York-based company filed for bankruptcy on Feb. 1, 2011. The Chapter 11 case number is 11-10372.

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