Hammons hotel chain declares bankruptcy to focus on legal issues

SPRINGFIELD, Mo. -- A Missouri hotel chain with nearly three dozen properties in 16 states declared Chapter 11 bankruptcy to help it deal with ongoing legal battles.

John Q. Hammons Hotels & Resorts filed the action on Sunday in U.S. Bankruptcy Court in Kansas City, Kansas, less than a month before a trial scheduled in Delaware over whether it must sell its properties.

At a news conference Monday in Springfield, Chief Executive Officer Jacqueline Dowdy said the company was financially stable and able to pay its bills.

No hotels are closing, she said, and customers shouldn't notice anything.

A half dozen entities with "John Q. Hammons" in the name filed for bankruptcy, and documents pertaining to those filings list more than 70 associated entities seeking relief.

They include various hotels managed by the Springfield-based company and affiliated catering operations, The Springfield News-Leader reported.

The company's website lists its portfolio as 35 hotels in 16 states, including eight in Missouri.

The Revocable Trust of John Q. Hammons, John Q. Hammons Hotels and related companies are scheduled to go to trial July 26 in a dispute stemming from a 2005 agreement in which entities associated with Jonathan Eilian loaned Hammons $300 million.

Dowdy called that deal a complicated transaction in which "Hammons agreed to sell the JQH's portfolio of 43 publicly owned hotels, believing that his trust would ultimately receive more than $335 million."

The trust never got that money, said Gregg Groves, JQH senior vice president and general counsel.

Hammons' opponents counter in court filings the transaction was one in which a line of credit was extended to Hammons so he could take his publicly traded company private. In earlier lawsuits, Eilian and related companies have claimed Hammons Hotels has failed to comply with terms of the deal.

A Delaware court upheld various aspects of the 2005 agreement between Hammons and Eilian-owned entities, including a requirement the 35 hotels owned by Hammons' trust be sold for cash.

John Q. Hammons died in May 2013 at the age of 94.