The owners of Rumjungle nightclub and bar filed for Chapter 11 bankruptcy late Tuesday to protect itself from being closed by Mandalay Bay.
Rumjungle-Las Vegas is suing Mandalay Bay over the opening of eyecandy Sound Bar and Lounge, claiming its contract with Mandalay Bay guarantees it will be the only nightclub at the hotel-casino.
The club plans to use bankruptcy court protection to remain open while it contests Mandalay Bay's actions, according to a statement.
"Mandalay Bay has no right to resort to intimidation or threats of closure when we believe it is Mandalay Bay that has violated the nightclub-exclusive provision of our lease agreement," Rumjungle-Las Vegas manager Neil Faggen said in a statement. "Rumjungle has acted in good faith at all times, and we will continue to fight for our employees and valued customers."
Rumjungle filed its lawsuit in September 2008 in state District Court claiming Mandalay Bay was violating the exclusivity provision in its contract. A trial is scheduled for Sept. 20.
The bankruptcy filing in Las Vegas listed secured debts of between $50,000 and $100,000. However, the nightclub listed $1.15 million in unsecured liabilities, including $1.1 million it owes to Mandalay Bay for rent in 2009, according to the court filing. The club listed the value of its assets at $12 million, according to court filings.
MGM Mirage, which owns Mandalay Bay, declined comment Wednesday, citing its policy of not commenting on pending court cases.
Rumjungle is a subsidiary of Miami-based China Grill Management, which has an extensive relationship with Mandalay Bay.
The company also owns China Grill, Red Square and Red, White and Blue at the hotel-casino.
Faggen said Rumjungle plans to remain open during the bankruptcy.
"It is our goal that Rumjungle will remain open and all employees will remain employed while we assert our contractual right to be the sole nightclub at Mandalay Bay," Faggen said.
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or 702-477-3893.