LuxUrban Hotels, which recently filed for Chapter 11 bankruptcy protection, is facing continued challenges as customers report being turned away from its Manhattan properties despite having paid for bookings. According to Bisnow and local news sources, these incidents have led to letters being sent to the bankruptcy judge, calling for an emergency hearing due to potential harm to consumers.
Cloudbeds, an online booking platform, informed the bankruptcy judge that it believed at least one of LuxUrban’s four hotels had closed but noted that LuxUrban had not updated this status on their platform. In addition, an attorney representing the Department of Justice also contacted the court with concerns about unpaid wages and consumer protections. Reports indicate that some workers walked off their jobs after not receiving pay.
The same day, a trustee letter was submitted as the Hotel and Gaming Trades Council alleged that LuxUrban owed several weeks’ worth of wages to unionized employees and managers. The union further claimed that the company was illegally withholding at least $57 million in retirement contributions.
Although the New York Fire Department ordered LuxUrban to vacate one property following a safety complaint, officials have not enforced any orders or found violations so far.
A virtual conference has been scheduled by the bankruptcy judge in response to these various claims.
Leo Jacobs, who serves as lead restructuring counsel for LuxUrban, declined comment when contacted by Bisnow.
Less than two weeks ago, LuxUrban filed for bankruptcy protection citing over $15 million in secured debts and $22 million in unsecured claims against less than $10 million in assets.
LuxUrban’s difficulties in New York City are longstanding. At The Herald—a 166-key property—the company reportedly accrued at least $1.6 million in arrears through December. This led a judge earlier this summer to approve eviction at the landlord’s request while ownership attempts to avoid foreclosure.
Other ongoing issues include a city fine of $1.2 million related to illegal Airbnb rentals and a Nasdaq delisting. Additionally, LuxUrban faces accusations of overstating its hotel holdings and is subject to a shareholder class action lawsuit.
