Distressed Hospitality -

Distressed Hospitality

THE SUTHERLAND APPROACH TO HOTEL RESTRUCTURINGS

Our Team

Sutherland’s approach is interdisciplinary and includes input from experienced real estate, hospitality, construction, tax, bankruptcy and litigation lawyers. Our construction lawyers regularly handle liens, construction defect claims and other disputes that are often found in troubled real estate projects. Our tax lawyers understand the tax consequences to lenders and borrowers resulting from foreclosures, deeds in lieu of foreclosure and workout transactions, and our litigators and bankruptcy lawyers regularly represent the interests of parties in litigation and bankruptcy proceedings related to distressed real estate assets. Our interdisciplinary approach allows us to navigate quickly through issues that are unique to hospitality assets. For example, we understand the unique challenges related to (i) a lender’s need to ensure that all personal property collateral necessary for the full operation of a hotel project – including but not limited to alcoholic beverage licenses - is acquired or obtained simultaneously with the foreclosure on the hotel real property, (ii) the unique issues that need to be worked out among lenders, hotel managers and hotel franchisors in a loan default/foreclosure situation, (iii) the complexities of the due diligence process a lender must conduct prior to determining the course of action to take regarding a defaulted hotel loan, and (iv) strategies and concerns of borrowers and lenders in the bankruptcy arena.

Issues Facing Hospitality Assets

Owner/Operator Disputes: We are regularly called on to resolve disputes between owners and operators of hotels. The disputes often involve performance issues under management contracts and whether the owner has a right to terminate. In connection with the termination of the management contract for a major resort hotel, we successfully represented the right of an owner to oust an operator through nonviolent, self-help remedies.
Receivership: Our team has extensive experience advising on the appointment of receivers. We know the various challenges of resorting to this remedy. In many jurisdictions, a lender has little to no input on the choice of a court-appointed receiver, and the receiver may have little or no experience with operating a hotel.
Construction Disputes: Our attorneys are experienced in resolving construction disputes through mediation, arbitration and litigation.
Franchise Litigation: We have one of the nation's premier practices in franchise litigation, with a focus on many industries.
Tax Controversies: We are nationally recognized for our work in tax litigation. While we seek to avoid litigation of tax controversies unless there is no other means of adequately protecting our clients' interests, our lawyers are experienced in every facet of tax litigation, from trials in the U.S. Tax Court, district courts or the Court of Federal Claims to arguments before the U.S. Supreme Court. Our experience includes corporate, tax accounting, international and insurance tax cases, as well as cases involving individuals and tax-exempt organizations.