Hospitality

Hotels and hospitality-related business require special expertise in handling commercial litigation and insolvency. In particular, hotels may be subject to the appointment of a rents-and-profits receiver. Moreover, in bankruptcy, a hotel may be classified as a "single asset real estate debtor" and subject to special, onerous rules unless a valid exception can be established, such as the operation of a restaurant or gift shop generating income other than rent.

Macdonald Fernandez LLP has significant experience in hospitality matters. In one example, we successfully reorganized a $20 million hotel in Riverside, California. Specifically, be brought the hotel into a strategic Chapter 11 bankruptcy case prior to an imminent shut-down. The hotel remained open without disruption while we handled issues ranging from municipal bonds, disputed easements, assumption of the franchise agreement and sale options. We were also able to shield the hotel from the onerous single asset real estate rules discussed above. We successfully obtained bankruptcy court confirmation of a Chapter 11 plan of reorganization that modifies the terms of the loan and resolves all other issues. Now the case is closed and the hotel is operating profitably.

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