A group of secondary lenders for the bankrupt Fontainebleau Las Vegas filed a motion today asking to do something the court itself has already indicated could happen: Move the case to liquidation.
The motion notes that the project has been in bankruptcy for three months and the developer has made no meaningful progress with its lenders to get the stalled project restarted. The motion also notes that the bankruptcy court issued a partial denial of a motion asking the the court to order lenders to restore funding to the project. In its filing for bankruptcy, Fontainebleau cited the lenders’ decision to deny $656 million in funding as the reason for the filing.
“With completion of the project by debtors not possible, a sale of the project to a third party and liquidation of the remaining assets is the only visible course to realize any meaningful value for creditors,” the motion said.
The motion was filed by a group of five funds, called the term lender steering group, including Los Angeles-based Canyon Capital Advisors, which recently acquired the Greek Isles; New York-based Carlyle Group; and Guggenheim Investment Management.
More than $16 million of the group’s cash collateral has been used since the bankruptcy filing. The term lenders hold more than $1 billion in loans.
Judge Jay Cristol said during a Sept. 16 hearing where the project’s lawyers asked for more time in Chapter 11 bankruptcy protection that “I think we can go three weeks [more], but not much longer. I’m very fearful the wheels are coming off.”
The developer has been in court-ordered mediation with unnamed parties. The Review-Journal reported in July that Apollo Management, which owns half of Harrah’s Entertainment, was interested in the project.
Last week, Penn National Gaming emerged as possibly being in talks to acquire the multibillion-dollar project. Gaming analysts expressed skepticism that the Wyomissing, Pa-based company would complete a deal for the project, which is 70 percent complete and has been estimated to need another $1.5 billion to complete.
Fontainebleau Las Vegas and two affiliates filed for Chapter 11 bankruptcy protection from creditors June 9, listing assets and debt of more than $1 billion each.
Fontainebleau Las Vegas could not be reached for comment. The project is on 24 acres on the corner of Las Vegas and Riviera boulevards.
Contact reporter Arnold M. Knightly at firstname.lastname@example.org or 702-477-3893.