On Oct. 18, 2011, JER/Jameson Mezz Borrower II LLC (Mezz II), a mezzanine borrower for the Jameson Inns Inc. hotels, filed a Chapter 11 petition just hours before a scheduled UCC foreclosure sale of Mezz II's sole asset consisting of its membership interest in JER/Jameson Mezz Borrrower I, LLC (Mezz I). In re JER/Jameson Mezz Borrower II, LLCAs a result of the Chapter 11 filing, the foreclosure sale was stayed.

Mezz II was formed in 2006 as part of a capital structure to acquire the Jameson Inns and Signature Inns hotel chains. As part of the capital structure, Mezz II and Mezz I (along with two other mezzanine borrower affiliates) were formed for the sole purpose of borrowing additional funds. Mezz II is the sole member of Mezz I.

The mezzanine debt's original maturity date was in August, 2008. Three available extensions were exercised and the maturity date was extended to Aug. 9, 2011. Mezz II and Mezz I were unable to repay the mezzanine debt obligations on the maturity date and the lender commenced enforcement actions by issuing a notice of intention to auction Mezz II's membership interest in Mezz I. The auction sale was scheduled for Oct. 19, 2011. The Mezz II lender also exercised an option to acquire the Mezz I secured debt.