* Paulson & Co group acquired resorts just last week
* Bankruptcy heads off debt maturity
* Affiliates list $2.2 bln assets, $1.9 bln liabilities
(Adds comments from court documents, background throughout)
By Tom Hals
WILMINGTON, Del., Feb 1 Five U.S. luxury resort
hotels, including the Arizona Biltmore, filed for bankruptcy on
Tuesday, just days after being acquired by a group that
includes affiliates of hedge fund Paulson & Co Inc.
The group put the properties into bankruptcy to head off
the maturity of $1.525 billion of debt on Tuesday, according to
In addition to the Biltmore, the resorts are the La Quinta
Resort & Club, a desert oasis once favored by actress Bette
Davis; Grand Wailea Resorts Hotel & Spa in Hawaii; Doral Golf
Resort & Spa in Miami; and the Claremont Resort & Spa in
The Paulson group, known as CNL-AB LLC, plans to use the
breathing space of bankruptcy to work on refinancing the debt,
which includes a $1 billion securitized mortgage.
The group expects to preserve its ownership, which is often
wiped out in bankruptcy when the value of debt overwhelms the
value of a company's assets.
"CNL-AB believes there is significant value in the assets
and is focused on reorganizing the debtors' businesses," said a
court filing by Daniel Kamensky, a partner with an affiliate of
Paulson & Co.
CNL-AB also includes affiliates of Winthrop Realty Trust
and Capital Trust Inc.
The five hotels have more than 3,000 rooms, 300,000 square
feet of meeting space and 14 golf courses.
The resorts were part of eight luxury properties acquired
at a foreclosure auction last week. CNL-AB held the
corporate-level debt on the properties, and essentially swapped
that for ownership.
The eight resorts were purchased by Morgan Stanley Real
Estate (MS.N) and other investors in 2007 for about $4 billion,
according to court documents.
The three properties not included in the bankruptcy filing
are the JW Marriott Grande Lakes and the Ritz-Carlton Grande
Lakes in Orlando, Florida, and the JW Marriott Desert Ridge in
Phoenix. Debts on those three do not mature until May 2012,
according to a source close to the matter.
Altogether, 30 affiliates of CNL-AB sought protection from
creditors in Manhattan's bankruptcy court. The affiliates
listed a combined $2.2 billion in assets and $1.9 billion in
Paulson & Co has made other real estate investments as the
economy begins to recovery. The company joined Blackstone Group
(BX.N) and Centerbridge Partners in a $3.9 billion acquisition
of Extended Stay, a chain of hotels, which was bought out of
CNL-AB retained the Kirkland & Ellis law firm and Houlihan
Lokey as financial advisers.
The case is In re MSR Resort Golf Course LLC, U.S.
Bankruptcy Court, Southern District of New York, No. 11-10372.
(Reporting by Tom Hals; editing by John Wallace)