Dec. 21--Lodgian, one of the nation's largest independent hotel owners, filed for Chapter 11 protection under the U.S. bankruptcy code on Thursday. 

Lodgian owns and operates 106 hotels in the United States and Canada. The hotels operate under the Marriott, Holiday Inn, Hampton Inn and Radisson brands. 

The Atlanta-based company listed assets of $1.07 billion and liabilities of $968.7 million, according to the petition filed in U.S. Bankruptcy Court in Manhattan. 

The company said the filing was precipitated by the declining economy, the fallout from the Sept. 11 terrorists attacks and a heavy debt load. 

Lodgian also announced it had received a commitment for up to $25 million in debtor-in-possession financing from a group of lenders led by Morgan Stanley and Lehman Brothers. 

The financing, which is subject to court approval, would allow the company to continue normal operations during the bankruptcy proceedings. 

"The Chapter 11 filing brings us closer to completing the operating and financial restructuring begun by the company in June 2001," David Hawthorne, president and chief executive officer, said in a statement. 

"We intend to emerge from bankruptcy in 2002 with strong prospects for revenue and earnings growth." 

Hawthorne, who joined the company in October, could not be reached for comment. 

His employment contract includes a clause that would award him a bonus of as much as $1.2 million for protecting the interest of equity holders during a restructuring. 

According to Securities and Exchange Commission filings, Hawthorne would get a bonus of $900,000 if equity holders as a group retain an interest in the company between 1 percent and 10 percent after a restructuring. The bonus rises to $1.2 million if current equity holders maintain a stake in the company of more than 10 percent. 

In any case, he would receive a bonus if the company restructures itself through bankruptcy court, according to the contract. 

The news caught many by surprise, including Lodgian's largest shareholder -- Kentucky businessman William J. Yung Sr. 

Yung, who resigned from the board in October, said he was disappointed by the company's inability to sell a significant number of hotels to reduce debt. 

"Now the company is worthless," he said. "It's a big loss for everybody." 

Lodgian's problems began long before Sept. 11. The company has struggled under a heavy debt load since its creation in 1998 from the merger of Servico and Impac Hotel Group. 

Earlier this year, Yung tried to buy the company. 

"Every morning I get up and I thank my lucky stars that the bondholders wouldn't work with me in buying the company," Yung said. "I lost a lot of money, but I could have lost a lot more. " 

The company reported a third-quarter loss of $18.3 million on $111.3 million in sales. 

At the time, Lodgian said it didn't expect to make $36 million of debt payments due Dec. 31. The company also said it would not be able to make a $12.3 million interest payment due Jan. 15. 

The New York Stock Exchange notified the company last month that it would delist the stock. 

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