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Innkeepers sues Cerberus over failed billion dollar hotel deal
By Palm Beach Business.com
PALM BEACH — Innkeepers USA, the Palm Beach-based hotel property real estate investment trust, is suing private investment firm Cerberus for breach of contract for allegedly reneging on an agreement to buy 64 hotels from Innkeepers.
According to the complaint, filed in U.S. Bankruptcy Court in New York, Cerberus and others agreed last May to buy the properties from Innkeepers for $1.12 billion as part of Innkeeper’s Chapter 11 plan of reorganization. However, Cerberus and Chatham to terminated the deal on August 19.
Innkeepers alleges that the move by Cerberus to terminate the agreement is an attempt to force Innkeepers to renegotiate. Innkeepers is asking the bankruptcy judge to order Cerberus to follow through on the deal or pay damages.
The “defendants purport to terminate their binding and irrevocable commitment based on an unidentified and unexplained ‘material adverse effect,’” according to Innkeepers’ complaint, “but no such material adverse effect has occurred. Cerberus’ and Chatham’s failure to provide any evidence of a material adverse effect is not surprising because the debtors’ (Innkeepers’) business remains strong and on course.”
“We remain pleased with the operating performance of our properties,” s Innkeepers’ Chief Restructuring Officer Marc A. Beilinson said. “That’s why we expect to once again see substantial interest in the 64 hotels that Cerberus and Chatham failed to purchase, in the event Cerberus and Chatham fail to live up to their contractual obligations.”
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