9 Crosby - Case Summary

Business Description

9 Crosby LLC (the “Debtor”) owns and operates the NoMo SoHo Hotel, a 264-room hotel located at 150 Lafayette Street in the SoHo neighborhood of New York, NY. The Debtor owns the real property where the Hotel is situated, and all of its assets are located in New York.

• In addition to its guest rooms and suites, the Hotel features meeting rooms, event spaces, and an in-house restaurant.
• Room income constitutes approximately 80% of the Hotel’s annual revenues.

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Corporate History

The Debtor acquired the Hotel in 2015 with the objective of redeveloping it into an upscale, unbranded boutique hotel. The acquisition was initially financed with several loans, which were later refinanced through the issuance of bonds pursuant to a Series 19 Deed of Trust.

Ownership and Parent Company Insolvency

• The Debtor’s membership interests are privately held. However, its indirect parent, Sapir Corp. Ltd. (“Sapir”), which holds a 99% ultimate equity interest in the Debtor, has publicly traded bonds on the Tel Aviv Stock Exchange.
• Sapir is currently subject to a judicial insolvency and liquidation proceeding in Israel. As a result of this proceeding, the Israeli Court appointed receivers who, in turn, designated a manager for the Debtor with the authority to commence this Chapter 11 case.

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Operations Overview

The Hotel’s day-to-day operations are managed by a third-party hotel management company, Crescent Hotel Management Services, LLC (“Crescent”), in accordance with an existing management agreement.

Workforce

• Crescent serves as the employer of record for the Hotel’s approximately 133 full- and part-time employees. The Debtor reimburses Crescent for the weekly payroll, which averages approximately $215,000.
• Many of the employees are members of the New York Hotel and Motel Trades Council, AFL-CIO (the “Union”). The Debtor is current on all labor-related obligations and intends to assume the collective bargaining agreement as part of its proposed sale process.

Cash Management and Seasonality

• The Debtor filed for Chapter 11 protection ahead of the holiday season, a period of historically strong occupancy rates, with the goal of completing a sale before the slower winter months. The Debtor anticipates that revenues generated during the case will be sufficient to fund post-petition operating expenses.
• Hotel revenues are collected in a deposit control account at Flagstar Bank, which is subject to a control agreement with Mishmeret, the trustee for the senior secured bondholders. Under a proposed cash collateral order, these funds will be regularly transferred to a new DIP operating account to pay ongoing expenses.

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Prepetition Obligations

As of the petition date, the Debtor’s primary funded debt obligation consists of approximately $103.1 million outstanding under its Series 19 bonds.

Senior Secured Bonds

• The Debtor’s outstanding obligations under its Series 19 Deed of Trust total NIS 330.2 million, which includes NIS 318.9 million in principal and NIS 11.3 million in interest. At current exchange rates, this is equivalent to approximately $103.1 million, plus additional fees and expenses.
• The bonds are administered by Mishmeret Trust Services Company Ltd. (“Mishmeret”) as trustee and are secured by a first-priority mortgage on the Hotel property, an assignment of rents and revenues, and a general security interest in all of the Debtor’s personal property.
• The Debtor’s indirect parent, Sapir, is a co-maker on an associated $90.1 million promissory note and also has approximately $52 million outstanding under its own Series 18 bonds, which are not direct obligations of the Debtor.

Other Secured Debt

• The Debtor reports approximately $1.0 million in other secured claims related to sales and use taxes.

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Events Leading to Bankruptcy

The Debtor’s Chapter 11 filing was primarily precipitated by the judicial insolvency and liquidation proceeding of its 99% indirect parent, Sapir Corp. Ltd., in Israel. Sapir’s insolvency, which resulted from its inability to contribute additional capital and its default on both its Series 18 and Series 19 bonds, left it unable to support the Debtor’s operations and debt service obligations.

• The Debtor’s financial distress was compounded by its own operational challenges, including difficult market conditions in the hospitality sector, rising interest rates and expenses, and lower-than-expected occupancy rates, which rendered the Hotel unable to support its debt obligations.
• Although the Debtor engaged Crescent to improve operations, management determined that a sale of the Hotel was the only viable path forward.

Prepetition Sale Process

• In August 2025, with the consent of the Series 19 Trustee, the Debtor engaged Eastdil Secured LLC (“Eastdil”) to conduct a comprehensive marketing and sale process for the Hotel.
• Eastdil’s process involved circulating an offering memorandum to thousands of potential buyers, resulting in 131 signed non-disclosure agreements, 30 property tours, 13 initial bids, and seven second-round bids.
• Following extensive negotiations, an affiliate of Dan Hotels Ltd. (“Dan Hotels”) emerged with the highest offer. On Oct. 23, 2025, the Debtor executed a stalking horse contract with Dan Hotels for a purchase price of $125 million in cash.

Chapter 11 Filing and Go-Forward Strategy

• On Nov. 4, 2025, the holders of the Series 18 and Series 19 bonds voted to preliminarily approve the stalking horse contract, conditioned upon the Debtor conducting a final auction process within a Chapter 11 case to solicit higher and better offers.
• The Debtor commenced its Chapter 11 case to execute the sale under section 363 of the Bankruptcy Code, which it believes will maximize value and address claims that could otherwise delay a closing.
• The Debtor intends to seek court approval of bidding procedures that include a 3% break-up fee and an expense reimbursement of up to $300,000 for the stalking horse bidder. The sale is expected to be implemented through a liquidating plan of reorganization, with the sale process running concurrently with the plan confirmation process.