The trust of the owner of one of the capital’s most popular hotels filed for Chapter 11 bankruptcy protection Monday, the latest in an ongoing battle for control of a series of hotels.
Capitol Plaza Hotel and Convention Center was originally developed by Springfield hotel magnate John Q. Hammons. He died in 2013 and Monday his trust owning his hotels, including the Capitol Plaza, filed for bankruptcy, according to the Wall Street Journal.
What that means for the company is uncertain. Chapter 11 bankruptcy, according to the federal government, “generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.”
According to the Journal, the hotels in question are the subject of a trial set to begin later this month in Delaware. At stake is whether Hammons family should have sold the hotels to Jonathan Elian, who gained right of first refusal as part of a deal made with Hammons in 2005.
At the trial slated to begin July 26 in Wilmington, Mr. Eilian was asking the court to force the trust to sell the 35 remaining hotels to him.
The bankruptcy filing, at least temporarily, puts the brakes on the Delaware litigation. However, last fall, the Delaware court issued a so-called status quo order barring the Hammons trust from taking any action outside of ‘the ordinary course of business’ with respect to the hotels. It remains to be seen if the bankruptcy filings violate the Delaware court order.”
It appears as though the bankruptcy filing could be part of the legal maneuvering in the case, especially because it appears as though the trial could be going Elian’s way. Again from the Journal:
In a pretrial hearing last fall, Vice Chancellor J. Travis Laster of Delaware’s Court of Chancery said the Hammons trust and companies were ‘serial and ongoing breachers’ that ‘have made zero efforts’ to sell the hotels.”
