Bankruptcy

Innkeepers USA Trust announced that it has filed for Chapter 11 bankruptcy protection in New York, leaving real-estate entities for one of its biggest creditors – Lehman Brothers Holdings Inc.

Innkeepers USA Trust, based in Palm Beach, Florida has 10,000 rooms in 72 hotels which are spread across 20 states. Having more than 2,500 employers it was acquired by Apollo Investment Corp. 3 years ago. The trust missed a payment on the fixed-rate debt in April and now Lehman Brothers Holdings Inc. needs a bankruptcy judge’s approval, in order to recover a remaining $238 million secured claim after they helped the real estate investment trust with a $1.2 billion loan.

Innkeepers USA Trust also got a support from Marriott International Inc., a very significant franchisor which agreed to continue the franchise agreements, but the current equity investors will have a difficult time under this bankruptcy plan. However they will be allowed to exercise an election to retain mortgages on the property in the original amount.

Apollo Investment Corp. declined to comment, but according to Innkeepers’ chief restructuring officer, Marc Beilinson, the trust will continue to operate their hotels and serve their guests in the ordinary course.

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