In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides insights on the potential for increased bankruptcy in the hotel market.
Article Link: https://therealdeal.com/la/2022/07/29/planned-spring-street-hotel-project-heads-to-bankruptcy-court/
Summary
Beijing-based developer Lizard Capital has filed for Chapter 11 bankruptcy protection for its Spring Street Hotel project in Downtown Los Angeles, preempting a foreclosure auction by lender Westridge Lending Fund. The filing occurred just a day before the scheduled auction. Lizard Capital’s associated LLC, which owns the property, estimated its assets to be worth between $10 million and $50 million. The bankruptcy filing lists seven creditors, excluding Westridge, which had previously filed notices of default on the property. The hotel was intended to be a flagship location for Lizard Capital, featuring a restaurant, gallery, and rooftop bar. The project had faced delays due to opposition from a local labor group but had reached a settlement in 2019. The bankruptcy adds to the financial challenges faced by Chinese real estate firms, with $13 billion in foreign currency bond payments looming.
- Lizard Capital filed for Chapter 11 bankruptcy protection to avoid a foreclosure auction by Westridge Lending Fund.
- The Spring Street Hotel project was planned to be a 170-key hospitality development with various amenities.
- Adam Stein-Sapir commented on the heightened risk of bankruptcy in the hotel market, especially for properties with significant debt.
Q&A
What are the implications of Lizard Capital’s bankruptcy filing for creditors?
The bankruptcy filing halts all attempts by creditors to collect debts and may result in them receiving a fraction of the owed amount, depending on the outcome of the bankruptcy proceedings.
How does a Chapter 11 bankruptcy filing protect a company like Lizard Capital?
Chapter 11 bankruptcy allows a company to reorganize its debts and continue operations while being protected from creditors’ claims, providing an opportunity to restructure and potentially return to profitability.
What should creditors consider when faced with a debtor’s bankruptcy?
Creditors should assess the likelihood of full recovery through the bankruptcy process and consider selling their claim to trade claim buyers for immediate cash, as waiting for a resolution can be lengthy and uncertain. For more information on this process, visit Pioneer Funding LLC’s guide to selling a bankruptcy claim.
