John Q. Hammons Hotels files for bankruptcy

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John Q. Hammons Hotels, a privately owned hotel company based in Missouri, filed for bankruptcy protection just weeks prior to a trial determining the fate of the company’s hotels.

Nearly 70 affiliates owned by the John Q. Hammons trust filed for protection through the U.S. Bankruptcy Court. The company is an owner and operator of 35 hotels under brands such as Marriott, Sheraton and Hilton. In their filing, the companies listed assets and debts of over $1 billion.

Hammond passed away in 2013 after developing more than 100 hotels. The bankruptcy filing is subject to a trust that owned group of hotels that remained under Hammons’ ownership after his hotel company was purchased by Jonathan Eilian, former managing director of Starwood Capital Group, in 2005. The buyout served 43 hotels owned by John Q. Hammons Hotels to Eilian, as well as preferred stock valued at $328 million and $300 million in loans.

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In 2014, the Delaware Court of Chancery upheld a number of aspects of the agreement between entities controlled by Hammons and Eilian, including a requirement that more than 30 of Hammons’ hotels be sold for cash two years after Hammons’ death, or May 2015. At a pretrial hearing last year, a vice chancellor with the court in Delaware called Hammons’ trust and companies “serial and ongoing breachers“ who “have made zero efforts” to sell its hotels.

During the new trial, which was set for July 26, 2016, Eilian was set to asked the court to force the trust to part with its 35 remanning hotels. Those involved with the case are waiting to see if the bankruptcy filings violate the existing Delaware court order.

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