Owner of Sheraton Pasadena Receives ‘Stalking Horse Bid’ on Hotel and 14 Other Properties, Including Queen Mary

A corporation that owns properties including the Sheraton Pasadena, which is being sued by the city of Pasadena over $850,000 in back taxes allegedly owed, and the Queen Mary in Long Beach has entered into a “Stalking Horse Bid” agreement for the sale of 15 of its properties, including the two Southern California holdings, as part of its Chapter 11 bankruptcy process, the company announced Tuesday.

Eagle Hospitality Trust has received the $470 million bid from Madison Phoenix LLC which is an affiliate of Monarch Alternative Capital, according to a statement issued by EHT. The proposed transaction would include 15 of 18 properties in the company’s portfolio that are owned by entities undergoing bankruptcy proceedings.

“It is common practice in the United States for an entity seeking to sell assets in a Chapter 11 process to identify and enter into a stalking horse agreement for the sale of its asset(s), and to subsequently solicit higher or otherwise better offers with the stalking horse’s bid as the floor price,” the statement said.

The Stalking Horse Bid “will not preclude the Chapter 11 Entities’ from soliciting higher or otherwise better offers by other interested parties pursuant to bidding procedures (‘Second Bid Round’) and auction(s) tentatively scheduled to be held on 20 May 2021 (‘Auction’),” it said. “Accordingly, the Stalking Horse Agreement effectively sets the “floor price” of $470 million subject to higher or better competing bids, which may include offers to purchase all or substantially all of the Chapter 11 Properties or to reorganise and/or recapitalise the Chapter 11 Entities.”

If a deal is reached on May 20, it would have to be approved by a bankruptcy court, according to EHT.

“Thereafter, all prepetition creditors of the Chapter 11 Entities will be paid in the order of priority of their respective rights,” the statement said.

Pasadena has filed a lawsuit against EHT and subsidiary Urban Commons, which owns the Sheraton Pasadena, alleging more than $850,000 in unpaid taxes owed to the city.

The tax bill results from nonpayment of Pasadena’s Transient Occupancy Tax, city officials said.

Related:

City Official: Pasadena Sheraton Owner’s Bankruptcy Filing Won’t Stop Pasadena’s Lawsuit Against Hotel

City Asks Court to Enforce Settlement With Pasadena Sheraton Hotel Owner Over Back Taxes

Lawsuit: Sheraton Hotel owes Pasadena nearly $700,000 in back taxes