US bankruptcy court denies BOA motion to dismiss Chapter 11 cases of EH-Reit, entities

THE United States Bankruptcy Court has denied a motion filed by the Bank of America (BOA) to dismiss the Chapter 11 cases of Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Trust (EHT) Singapore entities Eagle Hospitality Trust S1 and Eagle Hospitality Trust S2.

BOA is the administrative agent of EH-Reit's US$341 million prepetition syndicated credit agreement. It had argued that EH-Reit is not eligible to file a Chapter 11 case and the Chapter 11 cases of EH-Reit and the EHT Singapore entities were "not filed in good faith".

On June 1, the US bankruptcy court dismissed the motion. It also held that EH-Reit is an eligible debtor under the US bankruptcy code and that the Chapter 11 cases were filed in good faith, said EH-Reit trustee DBS Trustee in a bourse filing on Friday.

Had BOA succeeded in dismissing the bankruptcy protection cases of EH-Reit and the EHT Singapore entities, the latter two would not be able to access a US$100 million debtor-in-possession term loan facility with Monarch Alternative Capital.

BOA filed the motion after the US bankruptcy court approved a US$100 million debtor-in-possession (DIP) term loan facility with Monarch Alternative Capital which allowed EHT entities, including EH-Reit, to borrow up to US$100 million for use under an approved budget. This amount can be increased up to US$125 million under certain conditions.

If BOA had succeeded in dismissing the bankruptcy protection cases, EH Reit and the EHT Singapore entities would not be able to access the DIP financing facility.

EHT is a hospitality stapled group comprising EH-Reit and Eagle Hospitality Business Trust.

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