LuxUrban Hotels has entered liquidation after its attempt to establish a boutique hotel presence in New York ended unsuccessfully. The company’s Chapter 11 bankruptcy case was converted to Chapter 7 last week, following accusations from federal officials of “gross negligence” and mismanagement by the company’s leadership, as reported by Bisnow.
The conversion places LuxUrban under the control of an independent trustee. This marks a significant downfall for a firm that once aspired to compete with established hospitality brands such as Marriott and Hilton.
Last month, LuxUrban filed for bankruptcy after closing its leased hotels without notice. Despite the closures, the company continued accepting online reservations and payments. Guests arrived at properties like The Herald and The Tuscany in Manhattan only to find them locked and unstaffed.
Attorneys representing the Office of the U.S. Trustee advocated for an independent takeover earlier this month, citing ongoing risks posed by LuxUrban to both the public and creditors. Kenneth Silverman was appointed as trustee and has scheduled a meeting in December with over 400 creditors who are collectively owed about $123.6 million.
A substantial portion of this debt—nearly $119 million—is due to unpaid state taxes and penalties owed to New York’s Department of Taxation and Finance. In his initial filing, Silverman stated that “no property appears to be available to pay creditors.”
Elan Blutinger, former chairperson who resigned in December, has submitted a claim seeking $214,000 for unpaid loans. Founder Brian Ferdinand along with other executives remain defendants in an investor-led class-action fraud lawsuit that may broaden as more details emerge from bankruptcy proceedings.
Landlords have initiated eviction lawsuits against LuxUrban across all four Manhattan buildings it leased. One property, The Herald at 960 Sixth Avenue, is also subject to foreclosure proceedings. Lender Aareal Capital provided evidence including photographs showing poor conditions such as garbage-filled hallways and leaking ceilings after LuxUrban vacated the site; these were described as unsafe for remaining tenants.
Legal representatives for LuxUrban agreed to the liquidation order, stating there were “no meaningful assets” left for recovery.
“no property appears to be available to pay creditors.” — Kenneth Silverman
