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The judge overseeing the bankruptcy of hotel owner Eagle Hospitality Real Estate Investment Trust is considering referring two of its shareholders to prosecutors for possible criminal conduct over accusations they absconded with government COVID-19 relief, WSJ Pro Bankruptcy reported. At a hearing on Wednesday, Judge Christopher Sontchi in the U.S. Bankruptcy Court in Wilmington, Del., called the behavior of Taylor Woods and Howard Wu “beyond the pale,” “reprehensible” and an “abuse” of the U.S. government’s “attempt to help businesses survive the pandemic.” On Friday, Eagle Hospitality alleged that the businessmen, part-owners of the Singapore-based company, received $2.4 million in Paycheck Protection Program funds without authorization on behalf of hotel operations at the Queen Mary ocean liner in Long Beach, Calif. The two used the money for their own benefit, according to the company’s court filing. Eagle Hospitality, which has 15 U.S. hotels, said it has asked Woods and Wu to return the loan proceeds to no avail, and believes the funds have been depleted in ways not intended by the PPP, the popular source of forgivable, government-backed loans set up early in the pandemic, mainly to aid small business. PPP loans can be forgiven if they are mostly used to avoid layoffs. Eagle Hospitality has said it worries that it could be on the hook for repaying a loan it never received. Judge Sontchi said yesterday that he believed that fraud had been committed against Eagle Hospitality and that he would consider referring the matter to federal prosecutors for further investigation.

Kevin Ulrich’s Anchorage Capital Group is set to make a profit of about $2 billion in the sale of movie company Metro-Goldwyn-Mayer to Amazon.com Inc., Bloomberg News reported. The investment firm reportedly holds a roughly 30% stake in the company that’s worth about $2.5 billion in the sale. Anchorage invested around $500 million in MGM over a decade ago and helped restructure the company in bankruptcy. Including the MGM investment, Anchorage’s flagship fund is up 18% this year. The fund has gained about 8% in 2021 not counting the movie studio. Anchorage, MGM’s largest shareholder, took ownership of the company with other investors as part of a 2010 bankruptcy agreement that erased about $4 billion in debt. Amazon on Wednesday agreed to acquire the movie studios for $8.45 billion.

Bankrupt hotel chain Eagle Hospitality Real Estate Investment Trust alleged in a court filing that two of its big investors received $2.4 million in federal coronavirus aid on behalf of its Queen Mary operations, but used the money for their own benefit, WSJ Pro Bankruptcy reported. In a filing Friday in the U.S. Bankruptcy Court in Wilmington, Del., Eagle Hospitality said Taylor Woods and Howard Wu defrauded the unit, Urban Commons Queensway LLC, last year by getting a Paycheck Protection Program loan in that business’s name, even though they lacked the authority to do so, and then took the money. Woods said yesterday that the allegations are unfair and incorrect. Wu said that there was never any intention to do anything inappropriate involving the PPP loan. Urban Commons Queensway said it asked Woods and Wu to return the loan proceeds by last Thursday, but the request has gone unmet. The company said the loan proceeds have been rapidly depleted in ways that the U.S. Small Business Administration didn’t intend. The loans are eligible for forgiveness if they are mostly used to avoid layoffs. Urban Commons Queensway said it is concerned that if it doesn’t get a preliminary injunction, the assets could be diverted to “unreachable locations.” Eagle Hospitality has said it worries it could be on the hook for repaying a loan that it never received. More than two dozen U.S. units of Singapore-based Eagle Hospitality Real Estate Investment Trust filed for bankruptcy in January. Days later, Eagle Hospitality also filed for bankruptcy in the U.S.

Eagle Hospitality Real Estate Investment Trust has gotten bids of more than $480 million for 14 of its properties, but the bankrupt hotel chain doesn’t yet have a buyer for its lease for 1930s ocean liner the Queen Mary, WSJ Pro Bankruptcy reported. Heading into a Thursday auction, Monarch Alternative Capital LP was the lead bidder for Eagle Hospitality’s properties, with a $470 million offer for all 15 properties that set the floor price. The distressed-debt investor ended up having the best offer for 10 of 14 Eagle Hospitality properties, for a total proposed purchase price of roughly $360 million, according to auction records filed late Thursday. A hearing to approve the proposed sales is scheduled for May 28 in the U.S. Bankruptcy Court in Wilmington, Del. Proposed buyers for the other four properties are Beach Point Capital Management LP, Solid Rock Ventures LLC, Taconic Capital Advisors LP and FullG Capital Ltd, documents show. As of late Thursday, however, “there is no purchaser for the Queen Mary Hotel,” Eagle Hospitality said in a court filing.

Hospitality Investors Trust Inc., which has stakes in 100 U.S. hotels, filed for bankruptcy protection with a prearranged plan that would hand the company over to Brookfield Asset Management Inc., WSJ Pro Bankruptcy reported. The New York-based real-estate investment trust said yesterday that it would use the chapter 11 process to put its prepackaged agreement into effect. The proposal includes modifications to loans and to hotel management agreements after the hotel industry had its worst year on record in 2020. More than a year into the COVID-19 pandemic, many hotels are starting to find their footing again, and owners and investors expect bookings to revive as vaccination becomes more widespread and people regain their appetite to travel. Hospitality Investors continues to be among the industry players suffering from the pandemic, Chief Financial Officer Bruce Riggins said in a court filing. The company had $1.7 billion in assets and $1.36 billion in debt at the end of March.

When shares of Hertz Global Holdings Inc. soared after the company filed for bankruptcy a year ago, finance professionals reacted with a mix of confusion and scorn. A year later, small investors who bet on the company in its distress are getting the last laugh, WSJ Pro Bankruptcy reported. The century-old rental-car giant is poised to mint big gains for loyalists on its way out of bankruptcy. It’s a result that seemed unfathomable when its business unraveled early in the COVID-19 pandemic and another marker of an upside-down year in markets. On May 14, a bankruptcy court approved a winning auction bid that will hand control of Hertz to institutional investors who won a heated competition to buy the company out of bankruptcy as its prospects brightened. Hertz expects stockholders to receive more than $7 a share of value out of the deal, and perhaps as much as $8 a share, as the company emerges from chapter 11. Hertz closed at $5.76 on Tuesday in the over-the-counter market. The New York Stock Exchange delisted the shares in October after determining they were no longer suitable, since the company was in bankruptcy. Driven by individuals trading on apps, Reddit message-board boosters and the boredom of lockdown, financial markets have been on occasion hard to explain this year, including the GameStop Corp. mania, a joke cryptocurrency and a $100 million deli. It’s not surprising that standard bankruptcy practice should also get turned around. Hertz shareholders avoided being wiped out as the company’s prospects recovered to match the bullish outlooks of online traders who piled into the company in June after it filed for bankruptcy protection. Whether or not they were acting irrationally, their view of Hertz ended up closer to reality than the supposed smart money that dumped the stock.

Hertz Global Holdings Inc. won bankruptcy-court approval to hand control of the rental-car company to Knighthead Capital Management LLC, Certares Management LLC and other investors that won a bidding war over the company, WSJ Pro Bankruptcy reported. While shareholders typically receive nothing in corporate bankruptcies, the winning bid for Hertz will provide a distribution of more than $7 and as much as $8 a share to the company’s current owners, according to Hertz’s estimates. The winning bid reflected a dramatic rise in Hertz’s prospects in recent weeks as investor groups competed to buy the company out of bankruptcy. Earlier offers from potential bidders offered nothing for Hertz’s equity, and, as recently as mid-April, the company said its shareholders would come away empty-handed in the chapter 11 proceedings. Hertz filed for bankruptcy last May, fighting for survival as its revenue plummeted during the pandemic. “Today we’re on the verge of a remarkable recovery,” company lawyer Tom Lauria said at a virtual hearing Friday in the U.S. Bankruptcy Court in Wilmington, Del. COVID-19 vaccinations and a rebound in consumers’ eagerness to vacation are expected to reinvigorate the travel business and ease Hertz’s path out of chapter 11. Hertz’s creditors will be paid in full, and shareholders will see a substantial return, Lauria said. Rachel Strickland, a lawyer for bondholders that were outbid for control of the company, said they would fight to ensure that they would have everything paid to them that was due, including accrued interest.
https://www.wsj.com/articles/hertz-gets-court-approval-for-bankruptcy-d…