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By Kim Leonard, The Pittsburgh
Tribune-ReviewMcClatchy-Tribune Regional News
March 12, 2011--Hilton Worldwide Inc. claims it is owed $4.7 million in royalties and other fees related to the abrupt end of its franchise license for Pittsburgh's largest hotel -- but a bankruptcy settlement might pay the hospitality chain a fraction of that amount. Attorneys for Hilton and about 200 other businesses with unsecured claims against hotel owner Shubh Hotels Pittsburgh LLC raised issues Friday with a new Chapter 11 reorganization plan that earmarks $650,000 for them to share. The businesses list more than $30 million in combined claims. Creditors were to be paid in full for court-allowed claims under earlier proposals, but under the plan filed this week 80 percent of those owed money would recover "pennies on the dollar," attorney John Steiner, who represents an official committee of unsecured creditors, told U.S. Bankruptcy Judge Jeffery Deller. Steiner and other attorneys said the disagreements could be worked out in coming weeks. Deller set a March 29 hearing on several matters, including approval of a settlement between hotel mortgage holder BlackRock Financial Management Inc. and Dr. Kiran Patel, a Tampa businessman and cardiologist who acquired Shubh's equity in late September. The Wyndham Grand Pittsburgh Downtown was a Hilton from its 1959 opening until six months ago, when Hilton revoked its franchise license due to failing scores on inspections. Shubh, which bought the hotel from Hilton in 2006, sought bankruptcy protection from creditors after BlackRock moved to foreclose on its $49.6 million loan. A settlement reached Feb. 25 after mediated talks would pay BlackRock $10 million, and the New York City-based company would remain the mortgage funder under new terms. May 30 is the proposed effective date. Steiner said the new plan carves out creditors the 712-room hotel won't need to do business with in the future, and gives them lesser payments. Onetime Shubh Pittsburgh parent Shubh Hotels LLC has the largest claim, more than $15 million, the plan filed with the court shows. Attorney Paul J. Cordaro, representing Hilton, said the chain objects to its claim being part of a group that "gets a pro-rata share of a small amount of cash." Steiner said other unsecured creditors, vendors that the Wyndham Grand still will do business with, can choose a lump sum of 35 percent of their claims, or full payment with interest in eight semi-annual installments from hotel cash flow. They're claiming about $1.3 million. Attorney Robert Simons, representing BlackRock, urged the court to move toward quick approval of a plan, so that work on a long-unfinished expansion can resume and the Wyndham chain can firm up its plans to run the hotel. "There will be further amendments to documents," he said. ----- To see more of The Pittsburgh Tribune-Review or to subscribe to the newspaper, go to http://www.pittsburghlive.com/x/pittsburghtrib/. Copyright (c) 2011, The Pittsburgh Tribune-Review Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. |
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