John Q. Hammons hotel chain declares bankruptcy to focus on legal issues
SPRINGFIELD, Mo. – A Missouri hotel chain with nearly three dozen properties in 16 states declared Chapter 11 bankruptcy to help it deal with ongoing legal battles.
John Q. Hammons Hotels & Resorts filed the action on Sunday in U.S. Bankruptcy Court in Kansas City, Kansas, less than a month before a trial scheduled in Delaware over whether it must sell its properties.
A few of the chain’s hotels include the Residence Inn at KCI; Embassy Suites hotels in Missouri, Arkansas and Colorado; and the Chateau on the Lake Resort in Branson.
At a news conference Monday in Springfield, Chief Executive Officer Jacqueline Dowdy said the company was financially stable and able to pay its bills. No hotels are closing, she said, and customers shouldn’t notice anything.
A half dozen entities with “John Q. Hammons” in the name filed for bankruptcy, and documents pertaining to those filings list more than 70 associated entities seeking relief. They include various hotels managed by the Springfield-based company and affiliated catering operations, The Springfield News-Leader reported.
The company’s website lists its portfolio as 35 hotels in 16 states, including eight in Missouri. Hammons has about 300 employees in the five-county Springfield metropolitan statistical area.
The Revocable Trust of John Q. Hammons, John Q. Hammons Hotels and related companies are scheduled to go to trial July 26 in a dispute stemming from a 2005 agreement in which entities associated with Jonathan Eilian loaned Hammons $300 million.
Dowdy referred to that deal as a complicated transaction in which “Hammons agreed to sell the JQH’s portfolio of 43 publicly owned hotels, believing that his trust would ultimately receive more than $335 million.”
The trust never received that money, said Gregg Groves, JQH senior vice president and general counsel.
Hammons’ opponents counter in court filings that the transaction was one in which a line of credit was extended to Hammons so he could his publicly traded company private. In earlier lawsuits, Eilian and related companies have claimed Hammons Hotels has failed to comply with terms of the deal.
A Delaware court upheld various aspects of the 2005 agreement between Hammons and Eilian-owned entities, including a requirement that the 35 hotels currently owned by Hammons’ trust be sold for cash by the later of two deadlines.
John Q. Hammons died in May 2013 at the age of 94.
This story was originally published June 28, 2016 at 7:10 AM with the headline "John Q. Hammons hotel chain declares bankruptcy to focus on legal issues."