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Wednesday, July 28, 2021

Bankrupt hotel in downtown San Jose may not reopen in 2021

San Jose — A bankrupt hotel in downtown San Jose may not reopen until December — if then — based on a new proposed timetable for the hotel owner to file a plan to mend its broken finances, Show court papers.

The current schedule, overseen by the owner of the bankrupt Fairmont San Jose, located in the city’s downtown hotel district, is pushing the timetable for final approval of the hotel’s restructuring plan until sometime after November 30.

SC SJ Holdings and FMT SJ, two groups controlled by hotel owner Sam Hirbod, Bay Area Business Executives, have asked the bankruptcy court to extend the period during which they filed a comprehensive plan to reorganize the iconic downtown San Jose. have a special right to do so. accommodation.

Herbod’s group asked the US Bankruptcy Court to extend the deadline for filing a plan to October 4 of this year. The hotel owner also wants the court to extend the time till November 30 to seek support from the property’s creditors to approve the new proposed restructuring plan.

That means the court probably won’t be able to ratify the plan until sometime in December.

“The debtors are proceeding in good faith and have made substantial progress towards confirmation,” the insolvent entities said in court papers filed on July 2.

Complicating hotel regrouping and reopening efforts: an increasingly bitter battle between the accommodation owner and the hotel operator, Accor Management US

Hotel ownership groups and hotel operators became adversaries over a one-year period beginning March 2020, which is around the time the coronavirus jolted the finances of the Fairmont and hotels around the world.

Business enemies have accused each other of acting maliciously and undermining each other’s interests.

“The debtors are involved in a long-standing dispute with Accor,” the hotel owner said in court papers.

As part of the restructuring effort, the hotel owner is expected to remove Accor as manager and operator of the hotel.

The Hirbod Group has selected Hilton’s Signia brand as the new operator and manager of downtown hotels. That agreement is being finalized.

“The debtors have failed to make good progress on their plan,” Accor Management said in a court filing on July 16.

Accor also accused the hotel owner of being behind Accor in its efforts to get Hilton’s Signia unit on board as the new manager.

Accor said in its court filing that the Herbod Group “conspired for over a year with Hilton to take over the hotel” and enabled Hilton to secretly visit Fairmont San Jose to evaluate the property. Engaged in “secret operations” to create.

Accor claimed, “debtors made a calculated, bad faith attempt to use the plan confirmation process to switch to Hilton, restructure its obligations, and improperly manipulate the bankruptcy process.”

The hotel owner has argued that the establishment of Hilton as the new manager would strengthen the hotel’s financials.

Court papers show Hilton has agreed to invest $45.8 million in funding to help stabilize the hotel.

JPMorgan Chase Bank has also agreed to provide a further $25 million in financing for the hotel to help it emerge from bankruptcy.

The biggest creditor to whom the hotel owes money is Colony Capital, which holds a mortgage on the hotel for $173.5 million. Colony Capital, however, is providing some financial support to help keep the hotel afloat and is not seeking to foreclose on the property loan.

“The debtors are proceeding in good faith and have made substantial progress toward confirmation,” the hotel owner said in a July 2 filing.

Still, the latest proposal to extend the time to file a new version of the restructuring plan clearly signals a major delay in reopening hotels, warned Alan Wray, president of Atlas Hospitality Group, which is based in California. Tracks the lodging market.

“The earliest reopening of Fairmont San Jose is likely in 2022,” Ray said.

The financially troubled hotel closed its doors in March 2021, around the same time the hotel owner filed for bankruptcy.

“You have other major disputes between hotel ownership and management across the country, and they are delaying the opening of those hotels,” Ray said. “That’s what’s happening with the Fairmont.”


Nation World News Deskhttps://nationworldnews.com
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