Lodgian voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Dec. 5, 2001. According to the company's last unaudited consolidated balance sheet of Sept. 30, 2001, filed with the Securities and Exchange Commission, Lodgian listed total assets of $1 million and debt of $968.7 million.

The company has been operating its 105 hotels in 32 states and Windsor, Ontario, Canada under a court-approved debtor-in-possession status since then.

Lodgian operates hotels under national recognized hospitality franchises such as Holiday Inn, Marriott, Hilton and Crowne Plaza. The company is regarded in the industry as one of the largest owner/operators of full-priced and mid-priced hotels in the United States.

In a prepared statement, Lodgian president/CEO David E. Hawthorne attributed the fast-track reorganization plan mainly to franchisors, vendors and lenders.

"We especially appreciate the loyalty and dedication of our employees under difficult circumstances," Hawthorne says. The company dismissed 1,600 employees, two weeks after the Sept. 11 terrorist attacks in 2001. A month later, Lodgian president/CEO Thomas Arasi resigned. And in November 2001, the New York Stock Exchange delisted the company's stock.

Hawthorne says the reorganization plan will be effective and the company will exit Chapter 11 about Dec. 5, or within 30 days of the Nov. 5 approval by the U.S. Bankruptcy Court for the Southern District of New York. The specific date depends on when Lodgian can complete its exit financing with Merrill Lynch.

The CEO says when the plan is effective, existing equity shares will be cancelled and the bondholders and general unsecured creditors will receive a combination of preferred and common stock, while the CREST holders and existing common shareholders will receive a combination of warrants and common stock.

The company has been operating during its bankruptcy proceeds largely from a $25 million loan by a lender group led by Morgan Stanley and Lehman Brothers Inc., both New York-based.

For the six months ended June 30 of this year, total revenue dropped 14% to $208.1 million. Net losses before extraordinary items increased 13% to $15.4 million.

Lodgian was formed in December 1998 through the merger of Servico Inc. and Impac Hotel Group LLC.