Motion to Approve Marriott Settlement
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Judge John Dorsey confirmed the Wardman Hotel Owner debtor’s plan of liquidation
today after all Class 3 Pacific Life secured claims, Class 4 Marriott claims and Class 5 general unsecured claims unanimously
voted to accept the plan. At a hearing
to approve the disclosure statement on Sept. 1, counsel for the debtor projected that general unsecured creditors in Class 5 would ultimately recover 100% on account of their claims.
The plan follows approval of the sale
of the debtor’s shuttered real property that formerly operated as a hotel in a prime neighborhood of Washington, D.C. After a competitive auction, Carmel Partners Realty VII LLC acquired the property with a purchase price of $152.3 million.
Judge Dorsey also separately approved the debtor’s entry into a global settlement (embodied in the plan) between the debtor, secured lender Pacific Life, equity owner PL Wardman Member LLC and former hotel operator Marriott, which Laura Davis Jones of Pachulski Stang, counsel for the debtor, described as the “groundwork” for the plan itself. Under the settlement, Marriott would receive $18 million in distributions on account in full and final settlement of its $87 million claim against the debtor. Pacific Life, PL Wardman Member, the debtor and Marriott would mutually release all claims against each other.
Pacific Life also agreed, under the settlement, to “limited subordination of its right to receive payment” and to use the sale proceeds to fund plan distributions in an amount sufficient to provide at least $500,000 to general unsecured creditors, pay administrative and priority claims, fund a liquidating trust and fund the $18 million distribution to Marriott.