UPDATE: 8:45 a.m.: Innkeepers USA Trust has issued a response to Cerberus' statement found below:
“The binding commitment letter contains no 'market' material adverse event clause. As was stated in the complaint, Cerberus’ and Chatham’s purported termination is nothing more than a calculated effort to apply leverage upon the Debtors and their constituents to renegotiate the terms of the parties’ binding contract. Regardless of their motives, one thing is clear: Cerberus and Chatham are not excused from their obligations under the plain terms of the Binding Commitment Letter and Term Sheet,” Innkeepers said.
REPORT FROM THE U.S.—Cerberus Capital Management has responded to a lawsuit filed by Innkeepers USA Trust over Cerberus’ and partner Chatham Lodging Trust’s decision to abandon their deal for 64 Innkeepers hotels.
Cerberus’ statement reads: “The sponsors have asserted that a material adverse effect as defined in the definitive documents has occurred. The sponsors will establish the basis for their position in an appropriate manner. In addition, the bid procedures approved by the Bankruptcy Court provide that in the event the contract is terminated other than as permitted by the contract, the sole and exclusive remedy for the company is to retain the Sponsors' (US)$20 million deposit. As a result, the company has no basis to seek either specific performance or damages beyond the deposit.”
Chatham and Cerberus cited an unidentified “material adverse effect” in justifying their decision to walk away from the deal.
Bankrupt Innkeepers this week responded in court.
Deals Ad Will Appear Here
“Cerberus’ and Chatham’s purported termination is nothing more than a calculated effort to apply leverage upon the debtors and their constituents to renegotiate the terms of the parties’ binding contract,” Innkeepers said in the complaint filed Monday in U.S. Bankruptcy Court in New York. “Regardless of their motives, one thing is clear: Cerberus and Chatham are not excused from their obligations under the plain terms of the Binding Commitment Letter and Term Sheet.”
Innkeepers is seeking a court order that would force Chatham and Cerberus to reinstate the commitment letter or pay damages, which could exceed the US$20-million deposit on the acquisitions. Officials at Innkeepers and Chatham did not return messages left for comment this morning.
