Tuesday, August 30, 2011

Innkeepers sues Cerberus and Chatham

Dealbreaker - with nice imagery
WSJ - more detail

Innkeepers USA Trust said Cerberus Capital Management LP abandoned a $1.12 billion deal to buy the hotelier as part of a ploy to pay a lower price and must close the transaction or pay "substantial damages."

In a lawsuit filed Monday in a federal bankruptcy court in New York, Innkeepers said the two sides "stood at the goal line" Aug. 5 to consummate the deal when the private-equity firm told the hotel owner it wouldn't close, offering "no explanation." The decision upended plans by Innkeepers to exit bankruptcy protection, where it has been since July 2010.

Cerberus, which had agreed to buy 64 Innkeepers hotels with partner Chatham Lodging Trust, terminated the deal earlier this month, saying a "material adverse effect" had occurred that gave it permission to walk away. The buyout firm has since asked for a $20 million deposit on the deal to be returned.

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