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Full title: Reply (Debtors' Reply in Support of Debtors' Omnibus Motion, Pursuant to Bankruptcy Code Section 365(b), Seeking Entry of Order (I) Authorizing Debtor to Reject Certain Executory Contracts as of Date Specified Herein and (II) Granting Related Relief) (related document(s)702, 739) Filed by EHT US1, Inc. (Dean, G.) (Entered: 05/25/2021)

Document posted on May 24, 2021 in the bankruptcy, 7 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

GRANTING RELATED RELIEF 1 The Debtors in these chapter 11 cases, along with the last four digits of each debtor’s tax identification number, as applicable, are as follows: EHT US1, Inc. (6703); 5151 Wiley Post Way, Salt Lake City, LLC (1455); ASAP Cayman Atlanta Hotel LLC (2088); ASAP Cayman Denver Tech LLC (7531); ASAP Cayman Salt Lake City Hotel LLC (7546); ASAP Salt Lake City Hotel, LLC (7146); Atlanta Hotel Holdings, LLC (6450); CI Hospitality Investment, LLC (7641); Eagle Hospitality Real Estate Investment Trust (7734); Eagle Hospitality Trust S1 Pte Ltd. (7669); Eagle Hospitality Trust S2 Pte Ltd. (7657); EHT Cayman Corp. Ltd. (7656); Sky Harbor Atlanta Northeast, LLC (6846); Sky Harbor Denver Holdco, LLC (6650); Sky Harbor Denver Tech Center, LLC (8303);UCCONT1, LLC (0463); UCF 1, LLC (6406); UCRDH, LLC (2279); UCHIDH, LLC (6497); Urban Commons 4th Street A, LLC (1768); Urban Commons Anaheim HI, LLC (9915); Urban Commons Bayshore A, LLC (2422); Urban Commons Cordova A, LLC (4152); Urban Commons Danbury A, LLC (4388); Urban Commons Highway 111 A, LLC (4497); Urban Commons Queensway, LLC (6882); Urban Commons Riverside Blvd., A, LLC (4661); and USHIL Holdco Member, LLC (4796).As such, the Debtors submit that the only question for the Court is whether the two Non-IHG Agreements that IHG has not reviewed (and to which it is not a party) should be rejected.8 at 2, IHG offers no reason why, putting aside its concerns regarding the two Non-IHG Agreements at issue, the Court should not enter an order approving the rejection of the other Management and Franchise Related Contracts.Whatever the truth of this, and whatever the effect rejection of the Non-IHG Agreements and the HIDH Management Agreement may have on IHG, this falls short of a right to directly enforce the Non-IHG Agreements themselves.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ----------------------------------------------------------- x : In re: : Chapter 11 : EHT US1, Inc., et al., : Case No. 21-10036 (CSS) : : (Jointly Administered) Debtors.1 : : Re: D.I. 702, 739 ----------------------------------------------------------- x DEBTORS’ REPLY IN SUPPORT OF DEBTORS’ OMNIBUS MOTION, PURSUANT TO BANKRUPTCY CODE SECTION 365(b), SEEKING ENTRY OF ORDER (I) AUTHORIZING DEBTOR TO REJECT CERTAIN EXECUTORY CONTRACTS AS OF DATE SPECIFIED HEREIN AND (II) GRANTING RELATED RELIEF 1 The Debtors in these chapter 11 cases, along with the last four digits of each debtor’s tax identification number, as applicable, are as follows: EHT US1, Inc. (6703); 5151 Wiley Post Way, Salt Lake City, LLC (1455); ASAP Cayman Atlanta Hotel LLC (2088); ASAP Cayman Denver Tech LLC (7531); ASAP Cayman Salt Lake City Hotel LLC (7546); ASAP Salt Lake City Hotel, LLC (7146); Atlanta Hotel Holdings, LLC (6450); CI Hospitality Investment, LLC (7641); Eagle Hospitality Real Estate Investment Trust (7734); Eagle Hospitality Trust S1 Pte Ltd. (7669); Eagle Hospitality Trust S2 Pte Ltd. (7657); EHT Cayman Corp. Ltd. (7656); Sky Harbor Atlanta Northeast, LLC (6846); Sky Harbor Denver Holdco, LLC (6650); Sky Harbor Denver Tech Center, LLC (8303); UCCONT1, LLC (0463); UCF 1, LLC (6406); UCRDH, LLC (2279); UCHIDH, LLC (6497); Urban Commons 4th Street A, LLC (1768); Urban Commons Anaheim HI, LLC (9915); Urban Commons Bayshore A, LLC (2422); Urban Commons Cordova A, LLC (4152); Urban Commons Danbury A, LLC (4388); Urban Commons Highway 111 A, LLC (4497); Urban Commons Queensway, LLC (6882); Urban Commons Riverside Blvd., A, LLC (4661); and USHIL Holdco Member, LLC (4796). The Debtors’ mailing address is 3 Times Square, 9th Floor New York, NY 10036 c/o Alan Tantleff (solely for purposes of notices and communications).

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EHT US1, Inc. and its affiliated debtors and debtors in possession (the “Debtors”) hereby file this reply (the “Reply”) in (i) further support of the Debtors’ Omnibus Motion, Pursuant to Bankruptcy Code Section 365(b), Seeking Entry of Order (I) Authorizing Debtors to Reject Certain Executory Contracts as of the Date Specified Herein and (II) Granting Related Relief [Docket No. 702] (the “Motion”)2 and (ii) response to the IHG Limited Objection.3 In support of this Reply the Debtors respectfully represent as follows: REPLY 1. The IHG Limited Objection—which is the sole objection to the Motion—appears to be limited to two of the Management and Franchise Related Contracts listed on Schedule 1 to the Proposed Order: (i) the HIDH NDA4 and (ii) the HIOH Letter Agreement5 (each as defined in the IHG Objection and, together, the “Non-IHG Agreements”). 2. IHG argues that the Court should not approve the Debtors’ rejection of the Non-IHG Agreements because the Debtors have not provided IHG with copies of the Non-IHG 2 Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the Motion. 3 The “IHG Limited Objection” is the Limited Objection and Reservation of Rights of IHG to the Debtors’ Omnibus Motion, Pursuant to Bankruptcy Code Section 365(b), Seeking Entry of Order (I) Authorizing Debtors to Reject Certain Executory Contracts as of the Date Specified Herein and (II) Granting Related Relief [Docket No. 739]. 4 As explained in the First Day Declaration, the Debtors entered into certain non-disturbance agreements, or NDAs, pursuant to which certain of the Debtors may be obligated to (i) guarantee Master Lessees’ obligations under the applicable HMA in the event the Master Lessee fails to do so and/or (ii) assume (or cause a replacement lessee entity to assume) the obligations under the applicable HMA upon termination of the Master Lease between the applicable Propco and Master Lessee (each such term as defined in the First Day Declaration). See First Day Decl. ¶ 31. 5 In connection with the formation of the Eagle Hospitality Group in May of 2019, the hotel management agreement then in place for the management of the Holiday Inn Orlando was assigned to the Master Lessee of that property and, in connection with that assignment, UCCONT1, LLC (the Debtor Propco for that property) entered into a letter agreement with Evolution Hospitality, LLC, pursuant to which, in the event the Master Lease is terminated, (i) the assignment of the HMA to the Master Lessee would automatically terminate and (ii) the Debtor may be obligated to assume (or cause a replacement lessee entity to assume) the obligations under the HMA.

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Agreements. Specifically, IHG argues that because it did not receive such copies, it cannot make a “reasoned assessment of the [] Motion as it relates to IHG flagged hotels.”6 3. As an initial matter, the IHG Limited Objection is unclear regarding to what, precisely, IHG objects. Initially, IHG identifies three contracts that the “Rejection Motion proposes to reject”—the two Non-IHG Agreements and the HIDH Management Agreement7 (to which IHG is also not a party). However, IHG also notes that it has not “located” copies of the two Non-IHG Agreements, apparently conceding that it has reviewed the HIDH Management Agreement. Accordingly, to whatever extent IHG has a valid basis (or, as discussed below, standing) to object to the rejection of contracts to which it is not a party simply because it has not reviewed these contracts, this does not apply to the HIDH Management Agreement. As such, the Debtors submit that the only question for the Court is whether the two Non-IHG Agreements that IHG has not reviewed (and to which it is not a party) should be rejected.8 To that end, the Court should overrule the IHG Limited Objection and grant the Motion in full, including with respect to the Non-IHG Agreements for multiple reasons. 4. First, IHG offers nothing more than the vague statement that it must make a “reasoned assessment of the Rejection Motion as it relates to IHG flagged hotels.” 9 However, IHG does not offer any explanation for what purpose, precisely, it would be reviewing these agreements and how it could impact IHG. 6 IHG Limited Obj. at 2. 7 As defined in the IHG Limited Objection. 8 Further, and notwithstanding its declaration that it “objects to the entry of any order approving the Rejection Motion,” IHG Limited Obj. at 2, IHG offers no reason why, putting aside its concerns regarding the two Non-IHG Agreements at issue, the Court should not enter an order approving the rejection of the other Management and Franchise Related Contracts. 9 IHG Limited Obj. at 2.

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5. IHG appears to rely on the general requirement in the “management agreements”10 that IHG flagged hotels be managed in a way that is consistent with IHG’s rules and regulations, implying that this requirement (i) entitles IHG to review the Non-IHG Agreements11 and (ii) gives rise to some unidentified harm IHG may suffer if the Motion is granted. However, IHG ignores that the Debtors are rejecting these “management agreements.” Accordingly, whatever damage IHG may suffer as a result of rejection of the Non-IHG Agreements (and notwithstanding that IHG has failed to identify any such damage), IHG will be in the same position as all other counterparties to Management and Franchise Related Contracts: entitled to assert any damages it believes it suffered as a result of rejection of these agreements to which it is not a party and receive a general unsecured claim for any such damages it can prove. 6. Second, and relatedly, IHG’s concerns about some vague harm it may suffer if the Non-IHG Agreements are rejected are irrelevant to the Motion. A debtor’s decision to reject an executory contract is tested only by whether the debtor has appropriately exercised its business judgment in determining that the proposed rejection will benefit the estate. Yet, IHG does not question the Debtors’ rationale for rejecting any of the Management and Franchise Related Contracts, including the Non-IHG Agreements, nor does it dispute that, after the Closing Date, these agreements will no longer be a source of value for the Debtors and their estates. Instead, IHG focuses solely on how rejection of the Non-IHG Agreements will, or may, impact it. However, harm (let alone vague and theoretical harm) to third parties is not part of the applicable legal standard. See In re Trans World Airlines, Inc., 261 B.R. 103, 123 (Bankr. D. Del. 2001) 10 While not clear from the IHG Limited Objection, the Debtors understand IHG’s reference to multiple “management agreements” to be references to the HIDH Management Agreement and to the management agreement that is the subject of the HIOH Letter Agreement. 11 Contrary to IHG’s characterization, the Debtors’ compliance with the confidentiality provisions that govern the Non-IHG Agreements is not a “pretext.” That being said, the Debtors (i) have communicated to IHG their willingness to share the agreements if the other contract parties have no objection to waiving the confidentiality provisions and (ii) are, of course, ready to provide the Court with copies of the Non-IHG Agreements for an in-camera review.

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(“Courts in this Circuit that have addressed whether the potential burden imposed on a nondebtor party should be a factor in considering whether to permit the rejection have declined to undertake such an inquiry as irrelevant and unnecessary . . . the cases cited by Karabu for the proposition that a rejection motion involves a balancing of interest test are inconsistent with the reported decisions in this Circuit (see above) and the long standing position of this Court that in a rejection motion determination the focus is the benefit to the debtor’s estate.”); see also In re Old Carco LLC, 406 B.R. 180, 192 (Bankr. S.D.N.Y. 2009) (“The Court is sympathetic to the impact of the rejections on the dealers and their customers and communities, but such sympathy does not permit the Court to deviate from well-established law and “balance the equities” instead of applying the business judgment standard.”). 7. Finally, and perhaps most importantly, IHG ignores that it is not a counterparty to the Non-IHG Agreements (or either of the “management agreements”) and, therefore, has no standing to object to the Motion. As the Third Circuit has explained, “the language of § 365 makes it clear that the section is intended to protect the rights of the party to the assumed contract, not creditors in general . . . .” In re ANC Rental Corp., 57 F. App’x 912, 916 (3d Cir. 2003) (emphasis in original). At best, IHG has asserted some tenuous and vague connection between the “management agreements” and IHG’s rights, in that the former creates a general requirement that managers of IHG-flagged hotels must abide by all of IHG’s rules and regulations. Whatever the truth of this, and whatever the effect rejection of the Non-IHG Agreements and the HIDH Management Agreement may have on IHG, this falls short of a right to directly enforce the Non-IHG Agreements themselves. Indeed, this type of indirect relationship has been explicitly rejected as a basis for a non-party to have standing to object under section 365.

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8. In In re Three A’s Holdings, L.L.C., 364 B.R. 550, 561 (Bankr. D. Del. 2007), an owners’ association objected to the proposed assumption and assignment of a commercial real estate lease, arguing that the new tenant’s proposed use of the property was inconsistent with certain use restrictions. Overruling the debtor’s arguments, the court held that the association did have standing to object. However, and critical to the facts here, the court explained that the association had standing not because it sought to “enforce restrictions in the Tower/Cathedral lease, to which it is not a party, but rather to require compliance with duly recorded restrictive covenants which explicitly empower it to enforce.” Id. 9. Here, IHG points to no provision in any agreement (to which it is a party or otherwise) that creates, let alone “explicitly empower[s] it to enforce,” any rights under the Non-IHG Agreements. As such, it has no standing to object to the Motion with respect to the Non-IHG Agreements.12 10. For all these reasons, the Debtors submit that the IHG Objection should be overruled. [Remainder of page intentionally left blank.] 12 Or, to the extent it means to object to rejection of the HIDH Management Agreement, to rejection of that agreement either.

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WHEREFORE, the Debtors respectfully request entry of the Proposed Order, substantially in the form attached as Exhibit A to the Motion, overruling the IHG Objection and granting the relief requested in the Motion, together with any other relief the Court deems just and proper. Dated: May 25, 2021 COLE SCHOTZ P.C. Wilmington, Delaware /s/ G. David Dean Seth Van Aalten (admitted pro hac vice) G. David Dean (No. 6403) Justin R. Alberto (No. 5126) 500 Delaware Avenue, Suite 1410 Wilmington, Delaware 19801 Telephone: (302) 652-3131 Facsimile: (302) 574-2103 Email: svanaalten@coleschotz.com ddean@coleschotz.com jalberto@coleschotz.com - and - PAUL HASTINGS LLP Luc A. Despins (admitted pro hac vice) G. Alexander Bongartz (admitted pro hac vice) 200 Park Avenue New York, New York 10166 Telephone: (212) 318-6000 Facsimile: (212) 319-4090 Email: lucdespins@paulhastings.com alexbongartz@paulhastings.com Counsel to Debtors and Debtors in Possession

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