LuxUrban Hotels is facing liquidation, capping off its failed bid to build a boutique empire in New York.
The short-term hotel operator’s Chapter 11 case was converted to Chapter 7 last week after federal officials accused company leadership of “gross negligence” and mismanagement, according to Bisnow.
The move hands control of the firm to an independent trustee, marking a rare and rapid collapse for a company that once claimed it could compete with hospitality heavyweights like Marriott and Hilton.
LuxUrban filed for bankruptcy last month after abruptly shuttering its leased hotels, including The Herald and The Tuscany in Manhattan, while still accepting online reservations and payments. Guests reportedly showed up to locked doors and dark lobbies.
Attorneys for the Office of the U.S. Trustee pushed for a takeover of LuxUrban earlier this month, arguing the company posed ongoing risks to the public and its creditors. The court-appointed trustee, Kenneth Silverman, scheduled a December meeting with more than 400 creditors, who together are owed roughly $123.6 million.
Nearly $119 million of that stems from unpaid state taxes and penalties owed to New York’s Department of Taxation and Finance. Silverman’s initial filing said “no property appears to be available to pay creditors.”
Former chairperson Elan Blutinger, who resigned in December, filed a $214,000 claim for unpaid loans. Founder Brian Ferdinand and other executives remain defendants in a class-action fraud lawsuit brought by investors, which could now expand to include conduct revealed during the bankruptcy.
Landlords have sued to evict LuxUrban from all four Manhattan buildings it leased, and at least one property — The Herald at 960 Sixth Avenue — has become the subject of a foreclosure suit. Lender Aareal Capital submitted photos of garbage-strewn hallways and leaking ceilings after LuxUrban abandoned the site, calling conditions unsafe for other tenants.
LuxUrban’s lawyers consented to the liquidation order, acknowledging there were “no meaningful assets” to recover.
— Holden Walter-Warner
Read more
LuxUrban is accepting bookings at shuttered hotels
DOJ calls on independent trustee to take over LuxUrban
Unpaid rent on Herald Square hotel pushes property toward foreclosure
