Lodging Enterprises, LLC has filed a motion seeking court approval to auction substantially all of its assets, including 40 hotels and 27 restaurants, as part of its ongoing Chapter 11 bankruptcy proceedings. The hotel operator filed the motion on March 27 in the U.S. Bankruptcy Court for the District of Kansas.
The proposed sale, which comes nine months after the company's June 2024 bankruptcy filing, outlines an extensive marketing and auction process scheduled to unfold over the next six months, culminating in a potential auction on August 28, 2025.
"The Debtor hereby seeks authority to run a sale process for substantially all of its assets, including 40 hotels and 27 restaurants (collectively, the 'Portfolio') in an effort to maximize the value of the Portfolio for the benefit of all of the Debtor's stakeholders," the company stated in court documents.
According to the filing, Lodging Enterprises intends to retain CBRE, Inc. as a broker to assist with the marketing efforts. The company expressed confidence that "the robust marketing process contemplated will ensure that any sale of the Portfolio results in the highest and, otherwise, best offer(s) for the Debtor's assets and will inure to the benefit of the Debtor's estate."
The motion reveals that Lodging Enterprises has reached a settlement agreement with its secured creditors following "extensive negotiations." Under this agreement, the Prepetition Secured Parties—identified as Wilmington Trust, National Association, as Trustee for UBS Commercial Mortgage Trust 2019-C18, acting through Rialto Capital Advisors, LLC—have agreed to significant concessions.
Key elements of the settlement include:
- Agreement to carve out from their collateral sufficient funds to pay allowed administrative, priority, and other secured claims
- A split of remaining sale proceeds with 10% allocated to general unsecured creditors and 90% to the secured creditors
- Acceptance of an allowed secured claim that is more than $30 million lower than originally asserted
- Waiver of potential default interest, yield maintenance fees, and other charges
- Retention of credit bid rights for the secured creditors
The proposed bid procedures allow flexibility for potential buyers to bid on the entire portfolio or subsets of properties. The company also seeks authority to designate "Stalking Horse Bidders" who would set minimum bid thresholds for the assets.
"Given the number of properties comprising the Portfolio, and the Debtor's intent to permit offers for subsets of the Portfolio, having the flexibility to designate one or more Stalking Horse Bidders is critical," the filing states.
The timeline proposed in the motion includes:
- Bid Procedures Hearing: April 17, 2025
- Deadline to File Stalking Horse Notice(s): June 25, 2025
- Bid Deadline: August 14, 2025
- Auction (if necessary): August 28, 2025
- Announcement of Winning Bidder(s): September 2, 2025
- Sale Hearing: Approximately 21 days after announcement of winning bidder(s)
Lodging Enterprises filed for Chapter 11 protection on June 26, 2024. Court documents indicate the company owned 44 hotels on the petition date but has already sold one property and received authority to sell three more.
The U.S. Trustee appointed an Official Unsecured Creditors' Committee on July 17, 2024. No trustee or examiner has been appointed in the case.
The motion is scheduled for a hearing on April 17, 2025, where the court will consider whether to approve the proposed bid procedures.
The debtor is represented by Jonathan A. Margolies of Seigfreid & Bingham, P.C., and Timothy A. Davidson II, Brandon Bell, Kaleb Bailey, and Jason W. Harbour of Hunton Andrews Kurth LLP.
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Link to full document: Debtor's Motion for Entry of Order: (I) Approving Bid Procedures for the Sale of Substantially All of the Debtor's Assets...