Tillary Hotel lender’s modified Chapter 11 plan confirmed by court

By Sarah Lizee

Olympia, Wash., June 28 – A lender of 85 Flatbush RHO Mezz LLC, the owner of the Tillary Hotel in Brooklyn, N.Y., had its Chapter 11 plan for the company confirmed on Monday by the U.S. Bankruptcy Court for the Southern District of New York, according to court documents.

As previously reported, the debtor had filed its own plan and disclosure statement in November, but prepetition lender TH Holdco LLC filed a competing plan in February.

TH’s plan is premised on a sale of the property, permitting TH to credit bid, and to the extent TH is the successful purchaser, a commitment by TH to fund the sum of $200,000 for pro rata distribution to the debtors’ unsecured creditors.

The lender’s plan sets out 15 classes of claims with the highest amount going to TH Holdco secured claim, class 3, in the amount of $85,158,816, an impaired claim with voting rights.

The lender’s plan will be funded by the TH Holdco additional consideration, the sale proceeds (if any) which will be allocable to the hotel property and/or the residential property as set forth in the purchase agreement and the debtors’ available cash.

Administrative expense claims and priority tax claims will be paid in full.

For holders of general unsecured claims, if TH Holdco is the purchaser, holders will receive cash in an amount equal to the amount of the allowed claims, together with interest at the federal judgment rate. There will be an initial cash distribution on or about the effective date of such claim’s pro rata share of the $1.25 million TH Holdco unsecured claim dedicated fund; quarterly distributions thereafter of such claim’s pro rata share of 50% of the excess cash flow from operations of the hotel property and the residential property until such claim is paid in full in cash together with interest at the federal judgment rate on such claim; and, if any amounts remain unpaid one year from the effective date, a final Cash payment in an amount sufficient to pay the remaining unpaid amount in full in cash with interest.

If an entity other than TH Holdco is the purchaser, payments will be made in line with bankruptcy code priorities. General unsecured creditors will be paid their pro rata share of the remaining sale proceeds, in line with their statutory priority, by the purchase from the cash proceeds of the sale.

Existing equity interests will be canceled.

Other priority claims are unimpaired, except for 85 Flatbush RHO Mezz other priority claims, which will receive a pro rata share of the remaining cash from the plan fund after payment in full of senior classes.

The 85 Flatbush Mezz claim will receive a pro rata share of the remaining cash from the plan fund after payment in full of senior claims.

Holders of other secured claims are unimpaired, except for 85 Flatbush RHO Mezz other secured claims, which will receive cash after senior claims are paid in full, or delivery of the collateral securing their claims.

Holders of 85 Flatbush RHO Mezz and insider general unsecured claims will receive cash after senior classes have been paid in full.

The owner of the boutique hotel in Brooklyn, N.Y., filed bankruptcy on Dec. 18, 2020 under Chapter 11 case number 20-23280.

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