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Extended Stay America has become the latest casualty of the economic crisis. The operator of low to mid priced hotels filed for Chapter 11 bankruptcy protection as consumers cut back on travel leisure spending.

According to the bankruptcy filing, Extended Stay America has $7 billion in assets with $7.6 billion in debt. The company owns 680 properties across 44 US states.

In April 2007 Lightstone Group LLC’ bought the chain from the Blackstone Group (BX). To finance the deal, Lightstone borrowed $7.4 billion from investors. Two of those investors, Line Trust Corp and Deuce Properties Ltd, that bought $217 million of the debt began a lawsuit today against Bank of America (BAC) and Wells Fargo (WFC).

The suit accuses the two banks of colluding to take control of the properties after an initial default notice last month. The investors claim that the banks actions were “precisely timed to coincide with the summertime season,” when hotel cash flows often peak.

The top holders of Extended Stay bonds are Wachovia Bank NA., with $984 million in mezzanine debt and $515 million in mortgage debt; and Bank of America Corp., with claims $958 million in mezzanine debt and $400 million in mortgage debt.

The US public also owns a portion of the debt thanks to the Bear Stearns bailout. A government trust  claims $796 million in mezzanine debt and $274 million in mortgage debt.

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