1605 Broadway in Successful Crowne Plaza Times Square Chapter 11
March 21, 2023
March 21, 2023
Cleary Gottlieb represented 1605 Broadway LLC (1605 Broadway), an affiliate of Argent Ventures LLC (Argent), as the secured mortgage lender and DIP lender, in the Chapter 11 bankruptcy case of certain entities, including Times Square JV LLC (Times Square JV; collectively with its affiliated entities filing Chapter 11, the debtors), that own and operate the Crowne Plaza Times Square.
The bankruptcy will result in 1605 Broadway and its affiliates becoming the owner of the Crowne Plaza Times Square on the effective date of the debtors’ Chapter 11 plan.
The debtors filed Chapter 11 bankruptcy on December 28, 2022, in the U.S. Bankruptcy Court for the Southern District of New York, and their proposed plan of reorganization was confirmed by the court on March 21, 2023. During the bankruptcy, all the debtors’ assets, including the Crowne Plaza Times Square building, were marketed and were made available for sale at a public auction. The marketing process and auction generated a wide array of interest, but ultimately no party submitted an acceptable bid. The debtors’ plan implemented a toggle structure where, in the case no acceptable bids were received, a portion of 1605 Broadway’s secured debt would be converted into equity, resulting in the new ownership of the Crowne Plaza Times Square.
During the course of the bankruptcy, the debtors successfully rejected the existing franchise agreement with InterContinental Hotels Group (the franchisor) that encumbered the Crowne Plaza Times Square. The debtors and 1605 Broadway negotiated a settlement resulting in the franchisor supporting the debtors’ plan and entering into a short-term franchise agreement. The debtors and 1605 Broadway also negotiated and obtained a favorable settlement with the Unsecured Creditors’ Committee (UCC), which resolved any potential UCC objections to the plan and resulted in enhanced recoveries for certain creditors.
The debtors anticipate they will emerge from bankruptcy on March 31, 2023, or shortly thereafter.
Cleary has previously represented Times Square JV in securing the acquisition of a certain parcel under the Crowne Plaza Times Square building for $121 million, which closed prior to the bankruptcy on May 3, 2022, and Cleary has also represented Times Square JV’s mortgage and mezzanine lenders since their respective purchases of the mortgage and mezzanine loans with respect to the Crowne Plaza Times Square building in late 2020 and early 2021 respectively.