Court Grants Extended Stay Approval of Bidding Procedures for Auction

4/27/2010
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NEW YORK, N.Y.—April 26, 2010 (BUSINESS WIRE)—Extended Stay Inc. said that it has received Bankruptcy Court approval of bidding procedures that will govern an auction to select an investor to sponsor its proposed plan of reorganization. The company is moving forward with the auction process, pursuant to which bids are due on May 17. The auction will take place on May 27.

“The Court’s decision to approve the bidding procedures will enable Extended Stay to maximize value for the benefit of the Debtors’ estates,” said Ari Lefkovits of Lazard Freres & Co., L.L.C., the company’s financial advisor. “The auction will facilitate the competitive process already underway and be open to any qualified party, with the goal of developing a plan of reorganization that provides the Debtors’ estates with the greatest recovery. Moreover, it will establish a transparent process by which the company can select a plan sponsor and emerge from bankruptcy expeditiously.”

Gary DeLapp, the chief executive officer of HVM L.L.C., which manages the business, added, “We are looking forward to working with all potential plan sponsors and intend to provide assistance to all interested parties so that the highest value can be realized.”

On April 2, 2010, Extended Stay executed a commitment letter with Centerbridge Partners LP and Paulson & Co. Inc. to sponsor and fund a plan of reorganization. Extended Stay is soliciting competing proposals that provide greater value than the current offer.

According to the approved bidding procedures, those wishing to participate in the auction must submit a binding and committed proposal in writing to Lazard, along with a $150 million deposit on or before May 17, 2010, at 3:00 p.m. (Eastern Time).

An auction will be held May 27 at the offices of Weil, Gotshal & Manges LLP in Manhattan to consider the proposals and select the successful bid.

DeLapp said that while operations at Extended Stay’s 666 hotel properties have continued without interruption throughout the restructuring and sale process, HVM L.L.C. looks forward to the debtors finalizing the terms of their plan of reorganization.

Extended Stay Inc. and its affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code on June 15, 2009, in U.S. Bankruptcy Court for the Southern District of New York in Manhattan.


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