Last week we got a great response asking us to continue highlighting hairy deals. We think we have that covered this week with the sale of litigation rights. The case is so complicated that the best summary we could provide is a bunch of legalize. So if you are an attorney or know a good attorney, this one would be a good one to sink your teeth into. We also have two hotels in southern California for sale. This one is a bit easier to get your arms around. You can read the entire sale motion for each bankruptcy case for free and contact debtor's counsel to learn more about these sales by clicking on the links below:
The Complaint and Amended Complaint are on file with the Court in adversary 2:13-ap-00612. All interested parties are encouraged to read the Complaint and Amended Complaint to understand the estate’s claims alleged in the complaint for fraud, punitive damages, breach of fiduciary duty, and breach of good faith and fair dealing, all stemming from the pre-petition business relationship between the parties.
Two Hotels in Southern California For Auction
Snippet from Sale Motion
PLEASE TAKE NOTICE that, on August 7, 2014, at 10:00 a.m. the Honorable Richard M. Neiter United States Bankruptcy Judge for the Central District of California (the “Court”), will hold a hearing (the “Hearing”) on regular notice in Courtroom 1645 of the United States Bankruptcy Courthouse located at 255 East Temple Street, Los Angeles, California to consider the Motion For Order (1) Authorizing Sale Of Debtors Assets Free And Clear Of All Liens, Claims, Encumbrances And Other Interests Pursuant To 11 U.S.C. § 363; (2) Approving The Assumption And Assignment Of Certain Leases And Executory Contracts Pursuant To 11 U.S.C. § 365; and (3) Approving Stipulations Resolving Certain Secured Claims, filed by Coastline Investments, LLC (“Coastline”) and Diamond Waterfalls, LLC (“Diamond” and with Coastline, collectively, the “Debtors”) the debtors and debtors in possession in the above- captioned, jointly administered chapter 11 bankruptcy cases.
1. Coastline Hotel
Coastline is the owner of a hotel located at the top of a prominent hill with sweeping views in Pomona, California (the “Hilltop Hotel”). The Hilltop Hotel consists of 130 suites located on three acres of hilltop property by Interstates 10 and 57, Cal-Poly Tech University, and the Los Angeles County fairgrounds, Fairplex. The Hilltop Hotel has three hotel floors along with two levels of parking and features an outdoor pool, spa, exercise fitness center, sauna, steam room and beautiful, full service restaurant, lounge, meeting spaces and a banquet ballroom to accommodate approximately 300 guests.
Coastline believes that the fair market value of the Hilltop Hotel is approximately $12 million. The primary secured debts include a first priority lien in favor of First General Bank (“Bank”) to secure an obligation of approximately $5,250,000, and a second priority lien in favor of an individual investor group (the “Investor Group”) to secured an obligation of approximately $2,500,000, which obligation is also secured (cross-collateralized) the Diamond Hotel, as discussed below. Coastline’s unsecured debts are slightly over $100,000. As a result, Coastline believes that its estate is solvent and will be able to satisfy all claims in full.
Pursuant to the Motion, Coastline does not have a stalking horse bidder who has agreed to purchase the Coastline Hotel with no contingencies. As a result, on August 7, 2014, Coastline proposes to sell the Coastline Hotel to the highest bidder that provides the best offer, to be determined at the discretion of Coastline only. Coastline proposes the following procedures to be used in connection with any bidding on the Coastline Hotel:
Not later than August 1, 2014, all parties seeking to submit bids (“Bidder”) must qualify by:(i) Providing evidence satisfactory to Coastline of their financial ability to consummate a sale;
(ii) Delivering to Coastline a cashier’s or certified check for an amount equal to 3% of the proposed purchase price;
(iii) Confirm in writing that, if the Bidder is the successful bidder, the foregoing deposit shall be deemed non-refundable to Bidder;
(iv) Confirm in writing that Bidder is ready, willing and able to close the sale transaction before August 30, 2014; and (v) Execute an agreement in material form to that attached to the Motion.
Coastline will consider all bids timely and properly submitted and advise the Court at the commencement of the hearing as to the status of interest in the Coastline Hotel. However, Coastline shall, in its sole discretion, determine whether to proceed with the sale of the Coastline Hotel or withdraw the request for such a sale, based on receipt of bids.
2. Diamond Hotel
Diamond is the owner of a 161 room hotel located in Pomona, California (the “Diamond Hotel” and with the Hilltop Hotel, collectively, the “Hotels”). The Diamond Hotel is a full-service hotel, which includes a business center, meeting facilities, pool, spa, fitness center, steam, sauna, and offices. A restaurant is on the premises but has stopped food service for the time being. Diamond believes that the fair market value of the Diamond Hotel is approximately $12 million. The primary secured debts include a first priority lien in favor of First General Bank to secure an obligation of approximately $5,250,000 (same amount as secured by Coastline, but a separate obligation which is not cross-collateralized), and a second priority lien in favor of the Investor Group to secured an obligation of approximately $2,500,000, which obligation is also secured (cross-collateralized) the Hilltop Hotel. Diamond’s unsecured debts are under $100,000. As a result, Diamond believes that its estate is solvent and will be able to satisfy all claims in full.
In connection with the Debtors’ reorganization efforts, the Debtors retained CBRE to assist the Debtors to market their Hotels to generate the highest possible value. Although several offers were received with respect to the Hotels, a stalking horse bidder emerged for the Diamond Hotel only. No stalking horse bidder has been approved for the Hilltop Hotel. The best offer for the purchase of the Diamond Hotel was submitted by 3200 Temple Associates, LLC (the “Temple Associates”). At a hearing held on June 5, 2014, the Bankruptcy Court approved Temple Associates as “stalking horse” bidder and approved certain bid procedures in connection with the sale of the Diamond Hotel. Although a separate order was entered by the Court on June 23, 2014 [Doc. 82], the material terms of the order and bid procedures are as follows:
1. Temple Associates is approved as the stalking horse bidder with an opening bid of $8,275,000 for the Diamond Hotel;
2. In the event that Temple Associates is not the successful final bidder of the Diamond Hotel, it will receive a breakup fee equal to $248,250, subject to the terms of the sale agreement;
3. The hearing to consider the approval of a sale of the Diamond Hotel to Temple Associates or any qualified overbidder shall be held on August 7, 2014 at 10:00 a.m.; and
4. Any party wishing to bid at the auction on August 7, 2014 at 10:00 a.m., must submit to the Debtor documents and other evidence, as described in the Motion, not later than close of business on August 1, 2014, together with a non-refundable deposit of 3% of the proposed purchase price and proof of ability to close.
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