M Waikiki fifth amended plan of reorganization effective as of July 26

By Caroline Salls

Pittsburgh, July 27 - M Waikiki LLC's fifth amended joint plan of reorganization took effect on July 26, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Hawaii.

The plan was confirmed on July 10.

As previously reported, the company reached an agreement with Marriott International Inc. and Marriott Hotel Services, Inc. on a global resolution of their disputes in connection with the plan filed by M Waikiki and the Davidson Family Trust.

The resolution included an agreement on the treatment of the Marriott secured claim and the Marriott unsecured claim as well as the ownership of the company's hotel.

Also under the settlement, Marriott withdrew its vote rejecting the joint plan and agreed not to file any claim arising from the termination of a Marriott management agreement, a technical services and pre-opening agreement and a subordination non-disturbance agreement.

Creditor treatment

Treatment of creditors will include the following:

• Wells Fargo will receive a cash payment of $30 million and a five-year 6½% note on its secured claim;

• Holders of administrative claims, non-tax priority claims and general unsecured claims will be paid in full in cash;

• Holders of secured tax claims for years before 2012 will either be paid in full in cash or receive the collateral securing the claim;

• Holders of secured claims for taxes in years 2012 and after will retain their rights to payment;

• The holder of the R.D. Olson secured claim will receive a $1.43 million cash payment. There will be no interest unless the plan does not take effect by June 1, in which case interest would accrue at 5% from June 1, 2011 until the claim is paid;

• Marriott will receive payment for its secured and unsecured claim in an amount equal to those claims;

• The Davidson Trust will receive a share of new senior class 1 units in the reorganized company on account of its secured claim and unsecured claim;

• Holders of miscellaneous secured claims will either be paid in full in cash or receive the collateral securing the claim;

• The Aqua/Modern claim will be paid in full under several payment scenarios; and

• Holders of the company's class A, class B and class C interests will retain their interests. Holders will receive a distribution only if all allowed claims are paid in full.

M Waikiki, a San Diego-based hotel investment company, filed for bankruptcy on Aug. 31, 2011. The Chapter 11 case number is 11-02371.

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