A $1 billion bankruptcy deal between JD Holdings LLC and late hotelier John Q. Hammons’ estate received final approval, but court proceedings are not yet complete.
A group of creditors filed a notice to appeal the decision five days after the U.S. Bankruptcy Court-District of Kansas confirmed the settlement May 11.
Collectively known as commercial mortgage-backed securities lenders, the creditors also filed a supplemental document asking the Kansas court to allow their “oversecured” claims, according to the court records.
The claims in question are attorneys’ fees incurred by the CMBS creditors between April 19, 2016, and Feb. 18 of this year. The attorneys’ fees total $1.2 million, according to court records.
Of those fees, $279,207 are related to a loan for Chateau on the Lake in Branson. In 2016, a nearly $45 million loan for the Branson hotel was transferred to Midland Loan Services as a special servicer in the bankruptcy court proceedings, according to past Springfield Business Journal reporting.
The other loans cited involve Goldman Sachs, Barclays and Nomura, according to the supplemental document.
Ready to liquidate
The May 11 confirmation of the settlement allows JD Holdings, the largest creditor in the JQH bankruptcy case, to move forward with its purchase of the trust’s assets.
JD Holdings owner Jonathan Eilian showed he had $200 million “readily available for liquidation,” as well as a $1 billion loan to make the purchases.
The deal comprises nearly 150 assets, including JQH Hotels & Resorts’ current portfolio of 35 hotels, including University Plaza Hotel & Convention Center in downtown Springfield and Chateau on the Lake.
Under the terms of the deal, Eilian’s Atrium Hospitality LP will assume management of the Hammons hotels.
The deal also includes a nearly $500 million award to JD Holdings against all associated debtors, according to court records. The award is related to Eilian’s work to help Hammons privatize his company, according to SBJ reporting.
The CMBS creditors objected to that claim during the course of the bankruptcy proceedings, saying the plan and settlement “go beyond a settlement of the differences between (JD Holdings) and the debtors, and seek impermissibly to fundamentally alter the rights of creditors on shortened notice.” The court rejected this claim.
Field and arena in trust
The bankruptcy plan also established a new John Q. Hammons Charitable Trust.
JD Holdings has committed to a $20 million donation of cash and lien-free assets to the trust, including the Missouri Sports Hall of Fame, granted the debtors and any related parties don’t contest the settlement.
For Hammons Field, the new trust will assume the lease from the city of Springfield for the city-owned land the stadium was built on, according to the 47-page confirmation order.
The city-created nonprofit Springfield Center City Development Corp. in 2002 issued about $6.1 million in bonds to purchase and prepare the land, according to SBJ archives.
Hammons’ estate most recently owed the city about $550,000 in annual principal and interest payments to cover the bonds, and the payments are set to last through June 1, 2028.
The new trust also will assume the license for Missouri State University to use Hammons Field. The school will make annual payments to the trust of about $200,000, according to Suzanne Shaw MSU’s vice president of marketing and communications.
The new trust also will get the stadium lease to the Double-A Springfield Cardinals, according to the confirmation order. A lease amount was not listed and could not be confirmed by press time.
MSU, meanwhile, secured a roughly $1.8 million interim payment from JD Holdings to cover the March and October bond payments owed by Hammons’ estate for debt service on JQH Arena, Shaw said in a statement.
“Missouri State agreed it would not object to JD Holdings’ proposed reorganization plan, in exchange for this payment, and JD Holdings’ agreement not to contest any post-petition payments made by the trust,” she wrote.
MSU officials, Shaw said, also reserved their right to the remaining $20 million owed for Hammons’ naming rights to the stadium.
“The university is also now free to negotiate with a new donor for the right to rename JQH Arena,” she said in the statement.
SBJ compiles news on the respiratory virus outbreak.
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