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ARTICLE · 02 FEBRUARY 2015

River Road: A Cautionary Tale For Chapter 11 Financial Advisors

Blank Rome LLP
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This Chapter 11 case concerned River Road Hotel Partners LLC and its affiliates in connection with their ownership of the Intercontinental Hotel at Chicago’s O’Hare Airport.

United StatesInsolvency/Bankruptcy/Re-Structuring
Leon Barson
Leon Barson
Brandon Shemtob
Brandon Shemtob

Action Item: In order to avoid potentially costly economic ramifications, financial advisory firms engaged in Chapter 11 bankruptcy cases must take care to avoid any inconsistencies between the terms of their engagement letter and the form of retention order ultimately entered by the Bankruptcy Court.

The United States Bankruptcy Court for the Northern District of Illinois recently handed down an opinion, In re River Road Hotel Partners LLC, 2014 WL 5488259 (Bankr. N.D. Ill. 2014), dealing with the issue of a financial advisory firm's entitlement to a $2.6 million "restructuring fee" following confirmation of a Chapter 11 plan of reorganization proffered by the Debtors' secured creditor. The opinion sheds light on the importance of clear drafting in engagement letters as well as the need to closely monitor a debtor's proposed retention application for its financial advisor.

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