Wardman Hotel Owner final hearing on DIP financing set for Feb. 9

By Sarah Lizee

Olympia, Wash., Jan. 15 – Wardman Hotel Owner, LLC’s final hearing on approval of its proposed $8 million superpriority secured debtor-in-possession facility from Pacific Life Insurance Co. has been scheduled for Feb. 9, according to a notice filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company received court approval on Jan. 13 to access $3 million of the facility on an interim basis.

Earlier on Jan. 13, the motion seeking the DIP financing drew an objection from Marriott Hotel Services, Inc.

Until immediately before the filing of the Chapter 11 case, the hotel was managed by Marriott Hotel Services under a long-term management agreement, as previously reported.

Pacific Life is the senior secured pre-petition lender and the ultimate sole equity holder of the debtor.

“This case is about a lender seeking to shirk its obligations under a subordination, non-disturbance and attornment agreement (an SNDA) and long-term hotel management agreement (HMA) with Marriott via a bad faith bankruptcy filing after failing to achieve its desired result in other forums,” Marriott said in its objection.

Marriott said that while the debtor claims it has no viable funding source other than the DIP loan, the Maryland Circuit Court found three weeks ago that “the record is clear that [debtor] can finance its obligations when it chooses to do so. In this case, the court finds, it simply prefers not to.”

Pacific Life as lender is seeking to circumvent its obligations to Marriott under a prepetition SNDA that obligates Pacific Life not to disturb Marriott’s management of the hotel under the HMA, which extends for another 40 years, Marriott said.

“Through this bankruptcy, Pacific Life is attempting to avoid paying Marriott potentially tens of millions of dollars of damages resulting from the debtor’s and Pacific Life’s breach of their contractual obligations to Marriott.”

The DIP loan would mature on the earlier of July 1, the effective date of a Chapter 11 plan, the closing date of a sale of the company’s assets, or default and acceleration of the loan.

Interest will be 5%.

Washington, D.C.-based Wardman Hotel is the owner of a convention hotel, formerly operated as the Washington Marriott Wardman Park Hotel. The company filed Chapter 11 bankruptcy on Jan. 11 under case number 21-10023.

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