Blackstone Sued Over $8B Extended Stay Buyout

Law360, New York (June 15, 2011, 1:48 PM EDT) -- A bankruptcy trust for Extended Stay America Inc. sued Blackstone Group LP in New York on Tuesday, claiming the investment firm fraudulently reaped $2.1 billion by orchestrating an $8 billion leveraged buyout it knew would drive the hotel chain out of business.

The bankruptcy trust, which is pursuing legal claims on behalf of Extended Stay's creditors, said Blackstone and others, including Bank of America NA and Citigroup Global Markets Inc., exploited the hotel chain, financing the $8 billion buyout on the back of $7.4 billion in...
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