Williamsburg Hotel lender settlement OK’d, bid procedures set

By Sarah Lizee

Olympia, Wash., Oct. 24 – The Chapter 11 trustee overseeing the case of 96 Wythe Acquisition LLC, the owner of the Williamsburg Hotel in Brooklyn, N.Y., received approval of a settlement with secured lender Benefit Street Partners Operating Partnership, LP, according to an order filed with the U.S. Bankruptcy Court for the Southern District of New York.

Under the settlement agreement, in the event of confirmation of a qualified Chapter 11 plan, Benefit Street will have the following allowed claims as of Aug. 14, with interest and fees accruing thereafter: a senior secured claim in the amount of $95.95 million, comprised of principal, contract rate interest and costs and legal fees, to be paid to Benefit Street at closing of the sale of the hotel without further order of the court; and a subordinated secured claim in the amount of $12.74 million, comprised of an exit fee, protective advance interest, default interest, late fees and miscellaneous fees, which will be subordinated to all allowed administrative, priority and general unsecured claims (other than those held by insiders).

Any qualified plan will contain the following provisions, among others:

• A sale of the hotel and related assets as approved by the court, with Benefit Street permitted to credit bid its senior secured amount and otherwise participate in the auction;

• Payment to Benefit Street of all proceeds of the sale of the hotel and related assets up to the senior secured amount at closing, net of an agreed carve-out for fees of the trustee and post-effective date litigation;

• Pursuit of post-effective date litigation by the trustee or under the creation of a litigation trust managed by a trustee acceptable to Benefit Street, to pursue and settle all claims of the debtor and its estate for the benefit of holders of allowed claims and interests and make distributions of the proceeds thereof; and

• Mutual releases between the debtor, Benefit Street and the trustee.

Bid proceeds

The Chapter 11 trustee approval of bid procedures for the hotel and the debtor’s other assets.

Bids are due by 4 p.m. ET on Dec. 2, an auction, if needed, will be held on Dec. 6, a sale hearing will take place on Dec. 16, and the sale has to close by Dec. 30.

The trustee said he and his advisers are currently in the process of evaluating potential stalking horse bid proposals.

“This Chapter 11 case has been pending since February 2021, and the continued delay in implementing a sale merely increases the costs of this Chapter 11 case and affects the ability of the trustee to confirm a plan and make distributions to creditors,” the trustee said.

“The faster the sale process concludes, the faster the trustee can obtain the proceeds of a sale of the assets and make distributions to creditors.”

The Brooklyn, N.Y.-based hotel owner filed bankruptcy on Feb. 23, 2021 under Chapter 11 case number 21-22108.

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