As Sessa Capital continues its bizarre proxy fight against Ashford Hospitality Prime (NYSE:AHP), a new wrinkle has been added to the story.  Investors in Sessa Capital may not be able to redeem their investment funds from Sessa Capital.

A lawsuit filed by AHP stock management against Sessa Capital alleges that Sessa Capital has engaged in tortious interference with Ashford Prime’s business.  It will be up to a judge to determine how this case proceeds, but there’s a significant risk to Sessa Capital investors that founder John Petry hasn’t disclosed to them.

$200 million is more than the entire assets under management of Sessa Capital, which was last known to be about $179 million.  Should AHP stock management succeed in its lawsuit, it could liquidate Sessa Capital — and that means its investors could lose their entire investment.

AHP stock jumped on this news, and on an upgrade from an analyst, but that should be of little comfort to Sessa Capital investors.  Certainly, they never expected their stewards to launch a proxy fight, given that Sessa Capital never had a history of doing so.  Now it is embroiled in one, and it is losing.

This might normally entice investors to redeem their funds from Sessa.  Redemption notices must be received by April 15 in order to be liquidated on June 30.  However, AHP stock management is seeking to freeze Sessa’s assets to secure any possible payout.  Sessa investors must be livid at the prospect that not only might they be unable to withdraw funds, but may actually lose them in litigation.

AHP stock remains about 80-90-% undervalued based on most estimates.  It remains mystifying why Sessa would not let AHP stock management complete its strategic review and attempt to sell the company.  Instead, Sessa seems intent on trying to flip AHP stock for a quick profit that only benefits itself and not shareholders.

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