US Hotel Operator Linked to Hilton and Marriott Files for Bankruptcy
Phoenix American Hospitality, manager of Hilton and Marriott-branded hotels, filed for bankruptcy in Texas following an SEC fraud settlement over an $86 million scheme.
A wave of bankruptcies in the US business sector has hit the hospitality industry, as Phoenix American Hospitality and its affiliated REIT funds filed for Chapter 11 bankruptcy protection in Texas. The group manages hotels franchised under international brands such as Hilton and Marriott.
SEC Investigation and Fraud Allegations
The court filing follows severe financial and legal troubles. In June 2026, the US Securities and Exchange Commission (SEC) announced an enforcement action against Phoenix American Hospitality and its president, William Lee 'Perch' Nelson. According to the SEC, the company raised approximately $86 million from 2,000 retail investors through serious misrepresentations between March 2022 and July 2024.
Federal regulators stated that the company falsely claimed one of its funds owned 11 hotels, while in reality holding limited rights to only a single hotel until early 2024. Furthermore, investors were promised annual returns of up to 12%, whereas the funds were not profitable, and payouts were allegedly funded using the investors' own principal capital.
'The company raised millions through misleading statements while utilizing new investor capital to sustain unsustainable payouts,' noted regulatory filings regarding the $86 million scheme.
Settlement and Ongoing Class-Action Lawsuits
Under the SEC settlement, without admitting or denying the findings, the company and its president agreed to pay civil penalties totaling approximately $710,000 ($591,000 from the company and $118,000 from Nelson personally). Additionally, Nelson was barred from serving as an officer or director of a public company for five years.
Earlier in May 2026, the REIT funds terminated Phoenix American's management agreement, shifting to internal management under Joseph Reardon to stabilize operations. However, the legal pressure continues to mount as the firm now faces a class-action lawsuit filed by the law firm Bronstein, Gewirtz & Grossman on behalf of aggrieved investors.
