Lightstone Group LLC purchased the Spartanburg, South Carolina-based hotel company in 2008 for $8 billion. The firm invested $600 million in equity from an undisclosed fund.
What Went Wrong?
With $7.4 billion in debt, the company collapsed as hotel industry prices declined around the country to stay competitive in a recession. Extended Stay attempted to restructure $3.3 billion worth of mezzanine debt but were blocked by a lawsuit from junior debt holders. The company filed for bankruptcy on June 15, 2009.
A group of creditors led by Starwood Capital has launched a battle for control of the company, seeking to purchase the company’s first mortgage for $3.5 billion, according to reports.