W Union Square Hotel Put Into Bankruptcy by Lender

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The W New York Union Square hotel was put into bankruptcy by the junior mezzanine lender that took over ownership of the Manhattan luxury property in December from Dubai World.

Hotels Union Square Mezz 1, an entity controlled by junior lender LEM that owns the hotel, filed for bankruptcy in Delaware, saying it owes creditors as much as $100 million, according to bankruptcy papers filed in Delaware. The Chapter 11 reorganization stops a foreclosure auction that was scheduled tomorrow by the senior mezzanine lender, DekaBank Deutsche Girozentrale.

“This means the foreclosure proceeding originally scheduled for tomorrow won’t be taking place,” said David Gutstadt, a senior vice president in New York for Savills LLC, DekaBank’s adviser.