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HERITAGE HOTEL: Ally Buying Substantially All Assets for $8 Million

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Heritage Hotel Associates, LLC, asks the U.S. Bankruptcy Court for the Middle District of Florida to authorize the sale of substantially all assets to Ally Capital Group, LLC for $8 million cash, plus the assumption of liabilities, in accordance with their Hotel Purchase and Sale Agreement dated as of July 27, 2020, subject to overbid.

CCP SP Hotel, LLC, as successor in interest to Valley National Bank, has a first mortgage on the Debtor’s real property and a first priority lien on the Debtor’s personal property. The principal amount of the debt owed to CCP is approximately $5 million. Additional charges owed to CCP are disputed with the amounts ranging from approximately $350,000 to $1.5 million.

The Small Business Administration holds a second mortgage on the Debtor’s real property with a principal balance owed of approximately $554,636. There are third mortgages on the Debtor’s real property in favor of BayStar Hotel Group, George Glover and Henry Glover that were collaterally assigned to Valley (and now to CCP). The amounts owed under the third mortgages total approximately $898,034.

The Debtor also (i) owes real estate taxes to the Pinellas County Tax Collector for 2018 and 2019 in the amounts of approximately $139,112 and $151,949, respectively, and (i) will owe real estate taxes to the Pinellas County Tax Collector prorated for 2020 for the period from Jan. 1, 2020 through the date of closing under the Purchase Agreement.

The Debtor has determined, in the exercise of its business judgment, that it would be in the best interests of its creditors and its estate to maximize value through a sale of substantially all of its assets pursuant to Section 363 of the Bankruptcy Code. Absent such a sale, the Debtor will most likely be facing a liquidation under Chapter 7 of the Bankruptcy Code which would achieve far less for creditors than a sale as a going concern. As presently contemplated, the sale will be pursuant to Section 363 of the Bankruptcy Code, and the closing of the sale will occur under the Debtor’s existing plan of liquidation on file with the Court with the distribution of available sale proceeds to its creditors as provided in the Plan.

The Debtor has engaged Berkadia Real Estate Advisors, LLC to market and sell its assets. After several months of diligently working to locate potential purchasers for the Debtor, the Debtor received an offer from the Purchaser to purchase substantially all of the assets.

In connection with the proposed sale, on Aug. 4, 2020, the Court entered the Bid Procedures Order. In addition, in the Bid Procedures Order, the Court approved the Purchaser as the “stalking horse bidder” and approved the offer of the Purchaser as set forth in the Purchase Agreement as the “stalking horse bid.” All parties are directed to review the procedures set forth in the Bid Procedures Order for the process governing submission of competing bids and the bid deadline.

On July 27, 2020, the Debtor and the Purchaser executed a Hotel Purchase and Sale Agreement, which provides for the sale by the Debtor, and the purchase by the Purchaser, of substantially all of the assets for a total cash purchase price of $8 million plus the assumption by the Purchaser of certain liabilities of the Debtor. On Aug. 4, 2020, the parties executed a First Amendment to Hotel Purchase and Sale Agreement.

The Purchaser has delivered an escrow deposit to the Escrow Agent in the amount of $300,000. Subject to the terms and conditions of the Purchase Agreement and the Ancillary Agreements, Purchaser will and agrees to assume, pay, perform and discharge when due the following Liabilities of Seller to the extent related to the Business or the Hotel or the Property.

If the Sale Order is entered by the Court on Aug. 25, 2020 and becomes a Final Order on Sept. 9, 2020, then the Closing will occur by no later than Sept. 14, 2020.

The Debtor’s assets will be sold, transferred and conveyed by the Debtor to the Purchaser at Closing free and clear of all Encumbrances. The Encumbrances of any creditors or claimants of any kind whatsoever will attach to the sale proceeds. The closing of the sale will occur under the Plan, and the available sale proceeds will be distributed to the Debtor’s creditors as provided in the Plan.

At the Sale Hearing, the Debtor will ask that the Court enters an order waiving the 14-day stays set forth in Rules 6004(h) and 6006(d) of the Federal Rules of Bankruptcy Procedure and providing that the orders granting the Motion and the Contracts Motion be immediately enforceable and that the closing under the Purchase Agreement may occur immediately.

A hearing on the Motion is set for Aug. 25, 2020, at 3:00 p.m. Any objection to the relief requested must be filed with the Court by no later than Aug. 20, 2020 at 5:00 p.m.

A copy of the Agreement is availble at https://tinyurl.com/yyat6wek from PacerMonitor.com free of charge.

About Heritage Hotel Associates

Heritage Hotel Associates, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). Heritage Hotel Associates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-09946) on Oct. 21, 2019. At the time of the filing, the Debtor was estimated to have assets of between $10 million and $50 million, and liabilities of between $1 million and $10 million.

Johnson Pope Bokor Ruppel & Burns, LLP, is the Debtor’s legal counsel. Berkadia Real Estate Advisors, LLC, is the real estate agent.

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