A proposed bankruptcy loan of up to $125 million for the operator of the Queen Mary Hotel and other high-end lodgings has come under fire from lender Bank of America Corp., which said the financing package benefits the owners and managers but doesn’t do much for the distressed business, <em>WSJ Pro Bankruptcy</em> reported. U.S. units of Singapore-based Eagle Hospitality Real Estate Investment Trust filed for bankruptcy protection Jan. 18, with most of its properties closed. Bank of America said in court papers filed Thursday that a proposed borrowing, supplied by a hedge fund to sustain the enterprise, amounts to a blank check for investors “who, prior to chapter 11, showed an almost preternatural instinct for wasting money.” With 15 properties, only two of them in operation, Eagle Hospitality needs to look for buyers, before the market is glutted with emptied hotels, according to the bank. There are buyers ready to buy and reopen some of the properties, the bank said. The bank’s advisers think it is better to keep the hotels operating at low occupancy, instead of closing them completely. “An open hotel can keep the paint fresh and book rooms for the future. A closed one cannot,” the bank said. Bank of America’s objection was filed in the U.S. Bankruptcy Court in Wilmington, Del., where Eagle Hospitality Group filed its chapter 11 petition and which must sign off on the proposed loan. Another lender, Deutsche Bank AG New York Branch, joined in Bank of America’s objections.
