Jacqueline Marcus, a lawyer with Weil, Gotshal & Manges representing Extended Stay, said during a bankruptcy court hearing that she expects the court to grant the request for the examiner at a Sept. 22 hearing and that the actual examiner would be named after that.
According to court documents, the examiner would investigate the acquisition of Extended Stay by David Lichtenstein’s Lightstone Group, which bought the chain of 680 hotels from a Blackstone Group (BX.N) affiliate for about $8 billion. The investigation would also cover the events leading to the bankruptcy.
The examiner would be directed to determine whether the company has any claims against individuals for their involvement in the acquisition or bankruptcy, according to court documents.
Marcus also said during the hearing that the company has not made substantial progress on its restructuring plan and that it expects to ask the court for more time to pull one together.
Part of the issue with arranging a plan, she said, is that based on a valuation report, the leading party that controls and speaks for some of its debt is likely to change in mid-September.
In addition, during the hearing in U.S. bankruptcy court in Manhattan, Judge James Peck refused a request by Five Mile Capital to move a related suit against Cerberus Capital Management, Centerbridge Partners and Gem Capital Management to a New York state court.
Five Mile, which along with the other three firms are among the investors in Extended Stay’s debt, had filed a suit arguing that the contract the firms had signed when they invested in the debt prevented its competitors from holding direct restructuring discussions with Extended Stay.
The case is In re Extended Stay, U.S. Bankruptcy Court for the Southern District of New York, No. 09-13764. (Reporting by Caroline Humer, writing by Tom Hals; Editing by Gerald E. McCormick and Richard Chang)