Item 3. Legal Proceedings
Item 3. Legal Proceedings
From time to time, we may become involved in litigation matters incidental to the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, we are currently not a party to any litigation which we expect to have a material adverse effect on our business.
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On December 3, 2020, two of our subsidiaries, HPT CY TRS, Inc. and HPT TRS MRP, Inc., initiated arbitration proceedings against Marriott and several of its subsidiaries, or together, the Marriott Parties, that operated 122 of our hotels pursuant to a series of agreements. Because the Marriott Parties failed to make payments to us to satisfy the 80% Post-Guaranty Termination Threshold, as defined in the agreement, on October 6, 2020, we sent the Marriott Parties a notice of termination effective January 31, 2021. We have transferred the branding and management of 87 of these hotels to Sonesta and expect to transfer 10 additional hotels in March 2021. The Marriott Parties challenged the efficacy of the termination, so we initiated arbitration to ensure that an orderly transfer of branding and management to Sonesta occurred. We entered an agreement with the Marriott Parties regarding 16 hotels we previously agreed to sell, pursuant to which we agreed to have these hotels remain Marriott branded hotels until the arbitration is resolved. The Marriott Parties also challenged the classification of certain payments made to us during 2020 and asserted we need to refund cash advances Marriott paid us for our minimum returns of approximately $19.1 million. We are also seeking repayment of certain working capital advances we made to Marriott under the applicable management agreements.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
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