Filing Alert: SB Yen Management Group Affiliates Chapter 11
SB Yen Management Group Affiliates File Chapter 11 in District of Delaware
Update (Mar. 9, 2026): A comprehensive case summary is now available for the Chapter 11 bankruptcy filing of BY Hotel SPE-3 LLC.
BY Hotel SPE-3 LLC and certain other affiliates of SB Yen Management Group (collectively, the "Debtors")⁽¹⁾, owners and operators of two hotels at 1101 South Wabash Ave (Hilton) and 1100 South Michigan Ave (Best Western) in Chicago, filed for Chapter 11 protection on Mar. 8 in the U.S. Bankruptcy Court for the District of Delaware.
The Debtors attribute the filing to acute liquidity constraints stemming from the COVID-19 pandemic during the properties' initial ramp-up period, compounded by an unsustainable debt burden. The two hotel properties secure a $146.7 million prepetition mortgage loan issued by Delphi CRE Funding LLC in August 2019. Following early pandemic-related distress, the Debtors entered into a forbearance agreement that mandated aggressive terms, including rate and spread increases pushing interest above 8%, additional fees, and partial paydown requirements. In June 2024, the senior lenders issued an extension offer that the Debtors considered unfavorable. The Debtors subsequently ceased monthly interest payments, and out-of-court restructuring negotiations with the senior lenders ultimately collapsed.
Among the circumstances prompting the Chapter 11 filing was the senior lenders' pursuit of a receivership, which the Debtors contend would severely impair going-concern value. The Debtors assert that displacing current management would void grandfathered Best Western franchise fee structures, trigger approximately $7.5 million in accelerated franchisor-mandated property improvement programs (PIPs), and invite immediate unionization pressure on the 106-employee non-union workforce. The Debtors have secured a $1 million single-draw junior secured DIP facility from SBY DeKalb Inn, LTD, bearing interest at 10% per annum with monthly payments of $50,000, which together with the use of prepetition cash collateral, constitutes the Debtors' source of funding for operations and administrative costs during these Chapter 11 cases.
BY Hotel SPE-3 LLC reports $100 million to $500 million in both assets and liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-10324.
⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.
Chapter 11 Debtors
Top Unsecured Claims
Key Parties
Counsel:
- Rafael X. Zahralddin
Lewis Brisbois Bisgaard & Smith, LLP
Email: [email protected]
Financial Advisor:
- Getzler Henrich & Associates LLC
Signatories:
- Su-Mei Yen – Owner
Claims Agent:
Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.
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