Service Properties Trust 10-K

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. 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 certain payments to us under such agreements, on October 6, 2020, we sent the Marriott Parties a notice of termination effective January 31, 2021. We transferred the branding and management of 97 of these hotels to Sonesta and sold nine hotels during 2020 and 2021. The Marriott Parties continue to manage 16 of the hotels on our behalf. 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 and that we would own the 16 hotels the Marriott Parties continue to operate unencumbered by any Marriott contracts. The Marriott Parties also challenged the classification of certain payments made to us during 2020. On January 18, 2022, the arbitration panel declined to award us $19.9 million we had sought relating to Marriott’s application of certain working capital advances we made under the applicable management agreements, awarded us approximately $1.1 million in connection with a related claim and determined we would own the remaining 16 hotels unencumbered by Marriott contracts. We expect to pursue the sale or transition the branding and management of those 16 Marriott hotels in the second quarter of 2022. Item 4. Mine Safety Disclosures Not applicable. PART II