From Curtis Law Group’s Bankruptcy News page:

“Bankruptcy filings by corporations can lead to lawsuits, if the CEO or Chairman is not careful. Case in point: the Chapter 11 bankruptcy filed by the hotel chain Extended Stay has prompted a group of the hotel’s creditors to sue Extended Stay’s Chairman, David Lichtenstein.

“Bad Boy” guaranty provisions in finance law seek to protect lenders against “bad boy” acts such as fraud or intentional waste. In this case, the plaintiffs are lenders to the hotel chain who allege that the Chairman’s decision to file for Chapter 11 bankruptcy makes the company liable for violating the “bad boy” provision.

The plaintiffs seek $100 million, but bankruptcy lawyers for the hotel are stating that the plaintiffs motives are truly geared towards gaining leverage in negotiations for the bankruptcy’s eventual plan of reorganization.”

Tags: "Bad Boy" provision, bankruptcy filings, bankruptcy lawyers, Bankruptcy News, Chapter 11 bankruptcy, Curtis Law Group