The global COVID-19 pandemic has devastated the hospitality industry. Hotel occupancy rates have fallen greatly in many markets, with employee layoffs and property closures affecting even the largest and otherwise best performing hotels. It is uncertain when the industry will recover. Many hotel properties will require a chapter 11 bankruptcy case to successfully reorganize their debt obligations and operations and preserve the value of the business.
Hotel properties present a unique set of issues in bankruptcy. Owners, investors, lenders, and professionals in the hospitality industry should carefully consider the benefits and challenges associated with a chapter 11 case. Some of the principal strategic issues are:
All of the parties involved in a potential hotel chapter 11 case should carefully consider the issues outlined in this article. A comprehensive understanding of the risks and benefits of a chapter 11 case early in the process can often aid in achieving the best outcome