In 2007, various entitites related to the Extended Stay Hotels brand of hotels entered into financing arrangements in excess of $7 Billion with a group of lenders consisting of a senior loan and 10 mezzanine loans. In 2008, Merrill Lynch Mortgage Lending, Inc. (“Merrill Lynch”) sold a $20,000,000 loan participation interest in Mezzanine F to Atlas Venture I, LLC, (“Atlas”) a Dallas based investment fund. In May 2009, Atlas learned that a consortium including Wachovia, N.A., Bank of America, N.A., U.S. Bank, Maiden Lane Mortgage-Backed Securities Trust 2008-1 (a trust controlled by the Federal Reserve Bank of New York), BlackRock Financial Management, Inc., and/or Merrill Lynch intended to restructure the over $7 Billion in debt in a transaction with the borrower. The effect of this restructure would have been to eliminate close to $2.6 Billion of loan participations for the benefit of the banks and the borrower.
Atlas retained Alan Loewinsohn and LFD, who obtained a temporary restraining order on Atlas’s behalf which temporarily enjoined the banks from consummating their proposed restructuring.