Marriott International has alleged in Sonder Holdings’ bankruptcy proceedings that the aparthotel company sought to “leverage guest safety as a bargaining chip” to pay for its wind-down.
In an emergency motion filed with the U.S. Bankruptcy Court for the District of Delaware, Marriott outlined its final communications with Sonder in the days and weeks before Sonder announced Nov. 10 it was ceasing operations and would liquidate as a company.
Marriott seeks an order by the court to say that the emergency measures it would undertake don’t violate an automatic stay order from the court or relief from that automatic stay. Automatic stays in bankruptcy cases prevent creditors from collecting outstanding debts.
When Marriott terminated its licensing agreement with Sonder on Nov. 9, it enacted the emergency measures laid out by its agreement with Sonder that would allow it to, among other things, contact guests about the discontinuation of Sonder by Bonvoy, rebook guests to other properties, restrict new bookings for Sonder properties under Marriott channels and continue customer support for affected guests.
“The emergency measures have become increasingly necessary since Sonder abandoned its own customer support channels and redirected affected customers to Marriott for information and support,” according to the motion. “Marriott has specifically requested Sonder provide contact information for individuals responsible for operations and transitioning technology and related systems, but Sonder has failed to provide this information or engage Marriott in addressing customer needs.”
Marriott’s motion also claims that Sonder owes it more than $17.6 million, which breaks down to $14.4 million in unamortized key money and $3.2 million in various costs, fees and expenses.
As of press time, Sonder did not respond to a request for comment.
Guests as leverage
In the filing, Marriott said that by Nov. 7 it became clear to Sonder that its liquidity situation was dire and “effectively had little to no cash,” and it notified Marriott it would likely terminate operations the weekend of Nov. 8-9. That would include laying off its employees and shutting down critical systems, including electronic lock systems on apartment units and hotel rooms even while thousands of guests were staying at Sonder properties across three continents.
“The Company specifically threatened to file a free-fall chapter 7 case, which it told Marriott would leave guests abruptly locked out of their rooms,” the motion reads.
A “free-fall” bankruptcy occurs where there are no pre-negotiated plans in place for its restructuring.
The threat of an abrupt termination of operations along with the inability to pay for essential operating costs created an immediate risk to the health, safety and welfare of thousands of guests, Marriott stated. This would mean guests outside of their units would not be able to access materials left in their units, such as medications, passports or other personal effects.
“Some guests might arrive for stays only to find their units locked and unsecured, while others might be left occupying rooms in buildings where no management company was available to provide attention, oversight or assistance,” it stated.
To begin engaging with guests at the Sonder-operated properties as laid out by the emergency measures in its licensing agreement, Marriott had to end its agreement, which it did on Nov. 7, it said. Marriott implemented its emergency measures over the weekend of Nov. 8-9 as well as the following week.
That same weekend, Sonder notified its customers by email it would no longer honor its commitments and told them to contact Marriott for assistance with their reservations even though many guests had booked through third-party online travel agencies, according to the motion.
“Sonder’s own customer service phone line was replaced with a recorded message directing customers to Marriott’s customer service channels,” it stated.
The last days
Marriott entered into a licensing agreement with Sonder in August 2024 through which guests could book apartment units and hotel rooms at Sonder-branded properties through Marriott’s Bonvoy booking platforms. All of Sonder’s bookable units were available through Marriott’s channels as of June 2025.
Under the license agreement, Sonder operated its properties independently of Marriott, the motion stated. Even when booked through Marriott’s direct channels, guests’ payments went directly to Sonder, and Marriott did not have access to information about who paid deposits, how much they paid or for which bookings at Sonder’s properties. Instead, Sonder was supposed to pay Marriott a monthly royalty fee plus a fixed percentage of gross bookings revenue and other fees. Marriott also provided Sonder with $15 million in key money.
Most reservations for Sonder’s properties were prepaid, either in full or through a deposit, to Sonder, the motion stated. Sonder did not hold the deposits and payments in escrow, instead using them to fund its operating expenses.
On April 11, 2025, Sonder raised about $18 million through the issuance of additional preferred equity to certain investors. On Aug. 5, it raised about $24.5 million in incremental liquidity from some of its preferred investors through new senior secured debt that primed the then-senior secured notes facility. At the same time, Sonder entered into an agreement with Marriott to roll up certain unpaid license agreement fees into a senior secured debt facility.
By early November, Sonder’s liquidity dried up, the motion stated. On Nov. 5, Marriott and Sonder entered an agreement to amend and increase the August senior secured debt facility to $1.5 million in funding for one week of Sonder’s U.S. payroll and payroll taxes.
“Marriott’s decision to provide this additional funding was driven by a desire to support the continued pursuit of outcomes that would facilitate continued orderly operations of properties housing thousands of current guests and future reservations,” according to the motion.
On Nov. 6, Sonder sent Marriott a draft term sheet proposing that Marriott fund the entirety of Sonder’s wind-down costs, including a request for $50 million in additional new funding and “an extraordinary request” that Marriott assume Sonder’s liabilities, including those for its directors and officers.
Later that day, Sonder requested a call with Marriott, during which it stressed its liquidity position and said an interest in a “363 sale” under chapter 11 bankruptcy among other restructuring transactions fell apart.
Sonder made several attempts to convince Marriott to pay for its wind-down expenses, proposing amounts of $28 million as well as $14.3 million, to which Marriott declined.
“Marriott emphasized its expectation that, should Sonder take steps to shut down operations, it should do so in a manner to protect guests, but Sonder ignored these requests,” according to the motion.
Even so, Sonder informed Marriott by Nov. 7 that it had exhausted all its options, and it had no further sources of liquidity. It confirmed with Marriott it was unable to pay its debts as they became due would lacked sufficient resources to begin an orderly winding down of its business and expected “an abrupt shutdown” of its operations with immediate impact to guests.