Midland Unhappy with Innkeeper Bankruptcy Deal, Reuters Says
Posted July 30, 2010 1:50PM PST

Midland Loan Services has complained to the U.S. Bankruptcy Court for the Southern District of New York that the proposed settlement of the Innkeepers USA Trust case would saddle it with a $300 million loss, according to Reuters.

Innkeepers, owned by Apollo Investment Corp., filed for bankruptcy protection earlier this month. Apollo acquired the hospitality company in 2007 at the height of the commercial real estate run up in a highly leveraged deal. According to Reuters, Apollo has already written off 99% of its Innkeeper investment.

Midland, one of the largest special servicers in the country, has an Innkeepers loan secured by 45 hotels that carries a value of $825 million, but in the prepackaged bankruptcy proposed by Innkeepers, Midland would only see $550 million in repayment.

The deal is also unfair, according to court papers filed Friday by Midland, because Lehman Brothers Holdings, the largest secured creditor, would walk away with all of the equity in the reorganized company and full repayment of a $238 million loan.

Lehman, which had its own bankruptcy, announced earlier this week it had agreed to sell 50% of its equity to Apollo for $107 million.

Source: News Story


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