A trial over whether Cerberus Capital Management and Chatham Lodging Trust were justified in backing out of a $1.12 billion deal to buy hotels run by Innkeepers USA Trust has been postponed, Reuters reported Monday. The trial has been pushed back to Tuesday.
(Reuters) – A trial over whether Cerberus Capital Management and Chatham Lodging Trust were justified in backing out of a $1.12 billion deal to buy hotels run by Innkeepers USA Trust has been postponed, bankruptcy court officials said on Monday.
The three-day trial, expected to start on Monday, has been pushed back to Tuesday, according to officials who greeted spectators at U.S. Bankruptcy Court in Manhattan. No reason was given for the delay.
Innkeepers, the bankrupt operator of 72 hotels under the Hilton, Marriott and other brands, sued CerberusChatham CLDT.N> in August. Earlier that month, Cerberus and Chatham backed out of a joint venture agreement to buy 64 of Innkeepers’ properties.
U.S. Bankruptcy Judge Shelley Chapman in Manhattan originally agreed to start the trial on Monday. Court officials said the trial is now expected to start on Tuesday.
Innkeepers had pushed for a quick trial as it hopes to get back on its feet in time to maximize its sale value and pay back its creditors.
Cerberus and Chatham invoked a “material adverse event” clause in the sale deal that allowed them to walk away if something happened that could materially alter Innkeepers’ business.
In pretrial court filings, Innkeepers said no such event had occurred.
The hotel operator filed for bankruptcy protection in July 2010, saying its debt load had made it too difficult to keep up its properties.
Attorneys for Cerberus and Innkeepers could not be reached on Monday. An Innkeepers spokesman could offer no details on the reason for the trial delay, while a spokesman for Cerberus said he had not heard about it.
The case is Innkeepers USA Trust et al v. Cerberus Series Four Holdings LLC et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-2557.
The Innkeepers bankruptcy is In re Innkeepers USA Trust, in the same court, No. 10-13800.