BlackRock Joins Marriott in Getting Caught Up in Sonder Collapse

(Bloomberg) — Lodging firm Sonder Holdings Inc. entered liquidation in Delaware on Friday, disclosing several funds under BlackRock Inc. as its creditors.

The company’s bankruptcy has already dealt a blow to Marriott International Inc., which made Sonder hotels bookable on its website and app in an ill-fated bid to add rooms to its global network. Marriott provided funding to “critical short-term obligations” the day before it terminated the licensing agreement, according to a court filing on Friday.

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The Chapter 7 petition listed estimated assets and liabilities in the range of $1 billion to $10 billion each. Several entities under BlackRock, including BlackRock Global Allocation Fund and BlackRock Global Long/Short Credit Fund were listed as creditors.

Representatives for BlackRock and Marriott declined to comment.

BlackRock was also listed with 10% or more equity ownership in Sonder, according to the filing. Other shareholders include Senator Global Opportunity Master Fund LP, Atreides Foundation Master Fund LP and Polar Multi-strategy Master Fund.

Sonder, which mainly operates boutique hotels and competes with the likes of Airbnb Inc., has been struggling with its liquidity. It had only $27 million in cash and cash equivalents as of the end-of June, according to the second-quarter earnings release.

Last month, Sonder pursued an out-of-court agreement with creditors in a last-ditch effort to avoid a bankruptcy filing, Bloomberg reported. It announced a plan to liquidate on Monday.

Unpaid Rents

Sonder’s sudden decision to cease US operations is causing havoc for landlords and employees, who are chasing unpaid rents and wages from the shuttered hotel company.

Sonder often leased real estate from building owners and used it to set up its apartment-hotels. The practice set Sonder apart from most hotel companies, which license their brands to property investors in a bid to stay asset light. That strategy has set landlords scrambling to recover backrents.

In New York, the owner of buildings in Chelsea and near Battery Park where Sonder leased space sued the hotel company on Nov. 11, alleging more than $10 million in damages from each property. Sonder’s decision to shut down had unleashed chaos at the properties, according to the lawsuit, and amounted to an anticipatory breach of the leases, the plaintiffs alleged. Property owners in Miami Beach and Minneapolis have also sued Sonder over missing rents.