Fri 10/15/2021 14:32 PM
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Relevant Documents:
DS Approval Motion
Plan of Liquidation
Disclosure Statement

The Eagle Hospitality debtors, their official committee of unsecured creditors and their prepetition lenders filed a liquidating plan and related disclosure statement yesterday, Thursday, Oct. 14, which incorporates a “global settlement” that “reflects a good faith compromise and settlement of numerous inter-Debtor, Debtor-creditor, and intercreditor issues” including issues regarding substantive consolidation, the allocation among the liquidating debtors of $481.9 million in sale proceeds from 14 of the debtors’ 15 hotel properties, the validity and enforceability of intercompany claims and the funding of the wind-down of the Singapore debtors. The plan settlement also provides for the treatment of claims held by parties that had provided goods and/or services to a debtor propco hotel but at the time had no contract with such debtor propco in its legal name, entitling holders of claims to distributions as general unsecured creditors.

Under the proposed plan, prepetition lender claims against debtor propcos in Class 4 would be allowed against each liquidating debtor, in an aggregate amount of no less than $380.5 million (plus postpetition interest and fees), and would receive a guaranteed distribution in cash of $360.1 million on the effective date. Holders of prepetition lender claims would also receive interests in a liquidating trust, discussed below. The DS projects an ultimate recovery of 97.4%.

Holders of general unsecured claims against the debtor propcos in Class 5 would receive their pro rata share of a guaranteed distribution of $15 million on the effective date as well as interests in the liquidating trust. The DS projects GUC recoveries in Class 5 at 53.4%. The prepetition agent has also agreed, under the plan settlement, to voluntarily allocate its distributions on account of the prepetition lender claims (without reducing the aggregate distributions to be made on account of prepetition lender claims) to holders of general unsecured claims against the various debtor propcos to ensure so that they would all receive materially the same recovery percentage from the plan distributions.

The plan settlement is conditioned upon each of the debtors’ plans going effective on or before Dec. 31 and contemplates the creation of a liquidating trust for the benefit of creditors that would hold all property of the debtor propcos and non-propcos, which include, among other things, cash and various retained causes of action. The plan also allocates $3.25 million to wind down the Singapore debtors - EH REIT, EH Trust S1 and EH Trust S2.

To date, the debtors have reached agreement in principle to settle two such nonprivity claims in connection with the plan, settling a $28 million hotel franchising claim for $2.5 million and a $3.75 million hotel management fee claim for $300,000.

The disclosure statement is scheduled for hearing on Nov. 4 at 12 p.m. ET with objections due Oct. 28 at 4 p.m. ET.

DS Approval Motion / Confirmation Timeline

The debtors’ disclosure statement approval motion proposes the following confirmation-related timeline:
 
  • Oct. 28: Voting record date;
     
  • Nov. 4: Solicitation deadline (assuming court enters DS order following hearing);
     
  • Dec. 9 at 4 p.m. ET: Voting deadline/plan objection deadline; and
     
  • Dec. 16 or 20: Confirmation hearing date.

Plan of Reorganization / Disclosure Statement

A chart of the plan’s classes, along with their respective impairment status and voting rights, is shown below:
 

Treatment of Claims and Interests

The debtors’ plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:
 
 
Other Plan Provisions

The plan provides for releases (including third-party releases) of (a) the liquidating debtors and their professionals, (b) Alan Tantleff, the debtors’ chief restructuring officer, (c) any staff supplied by FTI Consulting Inc. to the debtors, (d) the REIT trustee, (e) the parties under the plan support agreement, (h) the committee and its members and (i) the prepetition agent and the prepetition lenders.

The plan also provides for releases of avoidance actions against trade vendors that provided goods and/or services “in the ordinary course of a hotel’s business and received payments which were reasonable relative to the value of the goods and/or services provided” to the extent such trade vendors do not vote to reject the plan. In addition, the plan includes an exculpation provision in favor of the released parties. The plan explicitly excludes former insiders Taylor Woods and Howard Wu (and their relatives), Urban Commons LLC, the master lessees, and their former professionals from any release provisions.
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