U.S. judge consolidates Marriott suits

November 21, 1992|By Norris P. West | Norris P. West,Staff Writer

A federal judge yesterday consolidated six cases filed against Marriott Corp. by bondholders who are seeking to block the company's controversial restructuring plan.

Senior U.S. District Judge Alexander Harvey II granted Marriott's motion to consolidate the cases. He also ruled that plaintiffs will have to put off interviewing witnesses and obtaining documents from investment firms relating to the reorganization.

Institutional and individual bondholders filed the lawsuits against Marriott after the Bethesda-based hotel and restaurant giant announced in October that it planned to split into two separate publicly traded companies.

A new company, Marriott International Inc., would consist of the company's lucrative hotel management business and be largely debtfree. The old company, to be renamed Marriott Host Corp., would assume the company's money-losing real estate, airport and tollroad concessions and $2.9 billion in debt.

Marriott's bondholders lost as much as $360 million after the company's announcement, when their bonds plunged as much as $300 per $1,000 face value.

Lawrence Kill, a partner in Anderson Kill Olick & Oshinsky, a New York law firm representing a group of institutional bondholders led by PPM America Inc., objected to the consolidation because his client had a "focused complaint" that deserved to be heard separately.

Judge Harvey, however, said that separate proceedings would waste time and clients' money.

The judge also granted a Marriott request to delay the bondholders' lawyers from obtaining relevant documents from investment firms.

Mr. Kill said he opposed the delay unless Marriott agreed to postpone its annual meeting in April, when stockholders are expected to vote on the reorganization plan.

Arne M. Sorenson, a partner at New York-based Latham & Watkins, which represents Marriott, said after the hearing that "the events of today have no effect on our annual meeting. Marriott will proceed with the transaction."

He said Marriott plans to file a motion to dismiss the lawsuits.

A federal judge in New York had issued a subpoena requiring the records to be turned over to the bondholders' lawyers by Nov. 30.

But Marriott said in court papers that since it plans to ask the court to dismiss the case, requiring the release of documents would be premature and expensive.

"The plaintiffs' attempt to obtain non-party discovery at this time is nothing more than an effort to gather facts sufficient to supplement their deficient complaint," Marriott's court papers say.

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