Extended Stay auction set for May 27-judge

NEW YORK, April 26 (Reuters) - A judge set May 27 as the auction date for bankrupt U.S. hotel chain Extended Stay America [ESAIN.UL], setting the stage for a showdown between bidders including Centerbridge Partners over who will fund the company's reorganization, according to court documents.

A group led by Starwood Capital had agreed to invest as much as $905 million in Extended Stay as part of a reorganization proposal to bring the chain out of bankruptcy. But the company is favoring a rival offer from investment firms Centerbridge and Paulson & Co. Related stories can be found here [nSGE62H0KA] [nN04157501]

Proposals must be delivered by May 17, according to court documents dated Friday.

Extended Stay, the largest owner and operator of mid-price extended stay hotels in the United States, filed for bankruptcy protection in June, unable to service more than $7 billion in debt.

The company was bought in June 2007 by an investor group led by David Lichtenstein's Lightstone Group.

The case is In re: Extended Stay Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-13764.

(Reporting by Chelsea Emery, editing by Dave Zimmerman)