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Employment-related claims, new default notices emerge at Eagle Hospitality Trust
FRESH troubles have risen for Eagle Hospitality Trust (EHT) in the form of employment-related claims and new notices of default and acceleration.
In its latest update announcement on Oct 30, the managers of EHT said they had discovered "a number of pending employment-related claims" related to the Queen Mary Long Beach hotel, the second-largest asset in its portfolio.
According to the announcement, the master lessor of the asset had been the signatory of two separate collective bargaining agreements prior to EHT's initial public offering (IPO) in May last year. These agreements covered union-represented employees working at the ship.
The managers and trustee of EHT are in the midst of consulting their professional advisers on the appropriate course of action to be taken in relation to the employment arrangements in respect of these claims, and any resulting obligations and liabilities that could arise.
EHT also announced a notice of acceleration in relation to a mortgage loan related to the Crowne Plaza Dallas, as well as a notice of default on a mortgage loan related to the Hilton Houston Galleria Area.
The notice of acceleration followed a default in which the lender drew upon a cash reserve previously set aside for use upon default. Following the drawdown, the amount under the mortgage loan stands at US$12.9 million.
As for the latest notice of default, the delinquent amounts under the loan remain outstanding as at the date of announcement.
In addition, an EHT master lessor is also on the receiving end of litigation proceedings initiated by two third-party service providers.
AmeriFactors Financial Group and Advanced Resourcing have filed claims amounting to some US$611,000 after default judgments were entered into against the master lessor.
Separately, EHT announced that eight of the 10 properties that had received termination notices from their respective franchisors received extensions to Nov 30, from the previously agreed upon Oct 30.
These termination notices were issued on the grounds of the failure of EHT master lessees to cure defaults for non-payment of fees and other amounts due and owing to the franchisors. The remaining two properties have unchanged termination dates of Jan 11, 2021.