Eagle Hospitality Trust's US units file liquidation plan, bulk of proceeds to go to bank lenders

UNITS of the beleaguered Eagle Hospitality Trust (EHT) in the US have filed for liquidation, with the trust's bank lenders set to mop up the bulk of the proceeds, court documents lodged on Oct 14 showed.

The documents said that proceeds of US$481.9 million were raised. A syndicate of lenders, led by Bank of America, will receive a guaranteed distribution in cash of US$360.2 million.

This amount represents a nearly full recovery for the lenders, who were claiming no less than US$380.5 million which was reportedly calculated as the sum of a list of items including the principal amounts, accrued pre-petition interest, pre-petition charges, swap obligations, as well as agent and professional fees.

As part of the settlement, US$15.1 million will be paid in cash as guaranteed other general unsecured claims (GUC) distributions to the liquidating trust. There will also be a separate allocation of US$1.6 million paid as distribution to holders of "convenience claims" which are defined as claims under US$50,000.

These payments must take place by Dec 31.

Court documents said the plan settlement was designed to achieve a "reasonable economic settlement of disputed claims" against the liquidating debtors, as well as bring about an efficient resolution for the Chapter 11 bankruptcy cases.

EHT is a stapled trust comprising Eagle Hospitality Reit (EH-Reit) and the currently dormant Eagle Hospitality Business Trust (EH-BT). Some 27 entities of EHT had filed for Chapter 11 bankruptcy protection in January this year in the United States Bankruptcy Court for the District of Delaware.

Following the payouts, EH-Reit's trustee DBS Trustee will take "all appropriate and necessary steps" to wind down EHT's Singapore units in accordance with and subject to the Singapore law.

Among other things, DBS Trustee will maintain the books, records and accounts of the units, invest the cash of these units in a "commercially reasonable" manner, and provide periodic updates to the liquidating trustee which will be disclosed prior to the confirmation hearing.

There will also be an "oversight committee" which consists of 3 people who will be appointed to oversee the liquidating trustee's performance of its duties under the plan and the liquidating trust agreement. The identities of these committee members will also be disclosed before the confirmation hearing.

Court documents added that the liquidating trustee and DBS Trustee will have to cooperate in investigating, asserting and prosecuting causes of action to maximise recoveries and minimise costs.

One of the hearings will be held before Christopher Sontchi, a bankruptcy judge in the District of Delaware, on Nov 4 for disclosures for the plan of liquidation.