Blackstone Group LP was sued for allegedly siphoning $2.1 billion from the leveraged buyout of Extended Stay America Inc, a deal blamed for the hotel chain's bankruptcy, according to court documents.
Blackstone teamed with Citigroup Inc in 2007 to sell the chain of about 680 hotels for $8 billion to little-known private equity investor David Lichtenstein, a "mark" who was willing to overpay, according to the lawsuit. The lawsuit filed on Tuesday in Manhattan's bankruptcy court was brought by a trust that is seeking to recover funds to benefit creditors who lost money in the bankruptcy.
Extended Stay emerged from bankruptcy in October after selling the chain for $3.93 billion to an investment group that included Paulson & Co and Centerbridge Partners, both hedge funds, and Blackstone.
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