Judge James Peck of U.S. Bankruptcy Court in Manhattan said Extended Stay could to tap into $86 million of its cash, against which creditors have a claim, until a final hearing on the use of cash set for July 17.
Spartanburg, S.C.-based chain plans to use $17.5 million to make mortgage payments on its hotels and another $50 million to pay HVM LLC, which manages the hotels, among other expenses, a lawyer for Extended Stay told the court.
The lawyer, Jacqueline Marcus of Weil, Gotshal & Manges LLP, argued that it was “critical” that the chain, which operates 684 hotels in North America, be allowed to ensure its “deficient” rooms be brought back up to “operating conditions” with the arrival of peak vacation season.
Marcus estimated Extended Stay would take in $54 million in revenue between Monday and the July 17 hearing.
Extended Stay won interim permission earlier to use its cash on June 16, the day after it filed for bankruptcy protection.
That filing came two years after David Lichtenstein’s Lightstone Holdings, a New Jersey based real estate investment firm, borrowed $7.4 billion to purchase the company from private equity firm Blackstone Group (BX.N).
Extended Stay’s lawyers told the court Monday they had removed from its request a provision for $5 million for Lichtenstein to defend himself against legal claims stemming from his decision to put the company into bankruptcy.
At the time of its filing, Extended Stay listed assets of $7.1 billion and liabilities of $7.6 billion as of Dec. 2008.
The case is in Re: Extended Stay, U.S. Bankruptcy Court, Southern District of New York, No. 09-13764. (Reporting by Phil Wahba; Editing by Derek Caney)