LuxUrban Hotels filed for Chapter 11 bankruptcy protection last week, but the problems keep on coming.
Paying customers are showing up to the company’s Manhattan properties, only to be turned away, according to Bisnow and local news outlets. The reports of jilted customers prompted letters to the bankruptcy judge, requesting an emergency hearing due to potential consumer harm.
Cloudbeds, an online booking platform, wrote to the bankruptcy judge that it had reason to believe at least one of LuxUrban’s four hotels closed, but LuxUrban had not updated the status of the property with the platform.
An attorney for the Department of Justice also wrote a letter to the bankruptcy judge, expressing concerns regarding wages and consumer protections. Workers reportedly walked off the job where they weren’t receiving pay.
The trustee letter came the same day the Hotel and Gaming Trades Council alleged LuxUrban owed weeks of wages to unionized workers and managers. The union also alleged the company was illegally withholding at least $57 million in retirement contributions.
The New York Fire Department ordered LuxUrban to vacate one of its properties, but despite a safety complaint, it hasn’t enforced any orders and has not uncovered any violations.
The bankruptcy judge scheduled a virtual conference to respond to the various claims.
Leo Jacobs, who is the lead restructuring counsel for LuxUrban, declined to comment to Bisnow.
LuxUrban filed for bankruptcy protection less than two weeks ago, citing more than $15 million in secured debts and $22 million in unsecured claims. The company claimed less than $10 million in assets.
LuxUrban’s issues, especially in New York City, are well-known. At the 166-key property known as The Herald, LuxUrban allegedly racked up at least $1.6 million in arrears through December, leading a judge to approve the landlord’s eviction request this summer as ownership tries to fend off foreclosure.
Other issues range from a $1.2 million city fine over illegal Airbnb rentals to a Nasdaq delisting. The company’s been accused of overstating its hotel holdings and is facing a shareholder class action lawsuit.
— Holden Walter-Warner
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