Innkeepers Material Adverse Effect Litigation

In May 2011, a Cerberus fund agreed to purchase 64 hotels from Innkeepers USA Trust for $1.12 billion. In August 2011, Cerberus notified Innkeepers that it was terminating the agreement pursuant to the Material Adverse Effect clause in the purchase agreement. Innkeepers filed suit claiming Cerberus was in breach of their obligations and that there had been no material adverse effect to its business conditions or prospects. Compass Lexecon’s President, Professor Daniel R. Fischel, was retained by Alan Glickman, Howard Godnick, and Michael Swartz at Schulte Roth & Zabel LLP on behalf of Cerberus to analyze the changes in Innkeepers conditions and prospects after May 2011. After extensive negotiations the purchase was consummated at a substantially reduced price. Professor Fischel was supported by a team headed up by Vince Warther and Jessica Mandel in Compass Lexecon’s Chicago office that included Cliff Ang and Tim McAnally.