BY Hotel SPE-3 LLC is roughly three months into a contested Delaware Chapter 11, running its two Chicago hotels on lender-controlled cash-collateral authority while a June 16, 2026 status conference has surfaced a reported shortfall in the debtors' adequate-protection sweep and unsettled their counsel structure.
The debtor and eight affiliates sought joint Chapter 11 relief on March 8, 2026, after senior lender ACORE Capital Mortgage, LP—as administrative agent for Delphi CRE Funding LLC—launched a Cook County foreclosure action in August 2025 and moved to appoint a receiver over the 514-room Hilton and Best Western properties Voluntary PetitionDkt. 1. The debtors warned that a receivership would trigger roughly $7.5 million in mandated franchise property-improvement work and forfeit grandfathered fee scales Amended Declaration of Su-Mei YenDkt. 20. The capital stack was anchored by a 2019 first-lien mortgage loan—later stated at not less than $149.2 million outstanding, priced above 8%, and matured since September 2024—with mezzanine debt pushing total funded obligations near $153 million.
Postpetition liquidity has run entirely through cash collateral rather than an approved DIP facility. Successive interim orders allowed the debtors to spend within a court-approved budget subject to weekly variance reporting while ACORE received replacement liens and periodic adequate-protection payments Second Interim Order Authorizing Use of Cash CollateralDkt. 77. A separate first-day motion for a $1.0 million junior secured DIP loan from an insider lender drew the secured lender's objection, and the docket reflects no entered DIP order, leaving interim cash-collateral relief as the operative liquidity source heading into the summer.
The case now turns on the June 16 status conference. ACORE reported that the debtors fell roughly $1.5 million short on the adequate-protection sweep for the week ending May 30, 2026, and that the debtors' financial advisor could not identify the missing funds—a potential violation of the cash-collateral order June 16 Status ConferenceDkt. 231. All noticed matters were continued without a reset date Minute EntryDkt. 232, and the parties are to contact chambers to reschedule; debtor's counsel separately withdrew the certification supporting retention of Lewis Brisbois to reassess the engagement Notice of Withdrawal of Certification of CounselDkt. 233. Near-term, a pension fund's motion for roughly $12,200 in unpaid postpetition contributions is set for July 14 (objections due July 7) Motion for Payment of Administrative ExpensesDkt. 238, and the June 16 transcript remains under restricted access until September 21, 2026 Status Conference TranscriptDkt. 237.
