By Howard Dicus
HONOLULU (HawaiiNewsNow) - U.S. Bankruptcy Court in Honolulu will rule within two months on a reorganization for the hotel that used to be the Ilikai Marina Tower, and approval of the plan is expected.
The 353-room hotel is now called the Modern Honolulu. Before that it was the Waikiki Edition. The failure of the Edition brand to take off lies at the root of the problems that led to the Chapter 11 filing last year.
The owners agreed to make the hotel the first location for Marriott's newest brand, but became increasingly dissatisfied as Marriott signed only one other Edition in the world, in Istanbul. In 2010 the owners, acting at a shift change in the middle of the night, ejected Marriott as branding and management contractor, installing Aqua Hotels & Resorts as the new management. Since there have been dueling lawsuits, and the bankruptcy filing, while reflecting real financial problems, appeared timed to prevent a New York court from ordering Marriott's reinstatement.
The reorganization plan, which was filed in Honolulu federal bankruptcy court on Friday, is seen as likely to win approval because it pays unsecured creditors 100 cents on the dollar, which would be good news for the hotels Hawaii-based vendors and suppliers.
Other terms of the plan include millions paid by the majority shareholder, a family trust with ties to California and Nevada, which would refinance a Wells Fargo mortgage and pay off Marriott. The Davidson Family Trust is already providing bankruptcy financing, which means, lending money for the hotel's ongoing operations during receivership. This financing alone has already reached $9 million, although much of this has been spent on bankruptcy legal bills; the owners say the hotel itself is already covering its operating costs.
"Encounter a unique, separate reality that belongs to The Modern Honolulu alone, rekindling the glamour of Waikiki and elevating it with service standards that exceed even the loftiest expectations," the hotel Web site says. "It's a laid-back take on luxury in one of the most idyllic places on the planet." The property is indeed stylish, but, like the Ilikai and the Hawaii Prince, it has the challenge of being an oceanfront hotel that overlooks a parking lot and a marina instead of a beach.
A developer spun off the Marina Tower during an unsuccessful attempt to renovate the original Ilikai, and the Edition launch ran into its own problems as the brand launched during the recession, though the owners argued that Marriott could have done more to promote the brand. Lately it has been doing more, announcing plans for Editions in London, New York, Miami Beach, Bangkok and Abu Dhabi, with more tentative plans for two more in Los Angeles and New Delhi.