Developers of the stalled, multibillion-dollar Fontainebleau Las Vegas project will get a chance to fight in court to revive their project.
They’re just not sure when.
A bankruptcy judge in Florida on Wednesday granted part of the developer’s motion for an expedited hearing on its lawsuit seeking $3 billion in damages against banks that backed out of a loan agreement.
No date was set for the hearing. The judge did set dates for attorneys to file arguments on Fontainebleau’s motion.
The banks’ arguments are due July 1, and Fontainebleau will have until July 7 to respond.
Fontainebleau spokesman Dave Satterfield said the developer was “very pleased the court agreed to expedite our motion for partial summary judgment,” even though a hearing date was not set.
“We expect to have a hearing shortly after" the July 7 response date, Satterfield said, and “look forward to presenting our oral arguments.”
Bank of America officials declined to comment Wednesday.
Bank of America is the lead lender for a $656 million loan that the developer was counting on to complete construction of the Strip project.
The developer is asking the bankruptcy court to order the banks to release the funds.
Wednesday’s hearing came a day after the lenders filed papers explaining why they stopped funding the Fontainebleau project.
During an April 17 meeting of bank and Fountainebleau officials, the developer confirmed the project was facing a “substantial construction deficit” and said additional funding would be needed to complete the project, according to the banks’ filing.
According to the banks, Fontainebleau representatives told the lenders during the meeting that they would likely seek bankruptcy protection. Three days later, the lenders pulled their financing.
The developer originally filed the $3 billion lawsuit in Clark County District Court but refiled it with the U.S. Bankruptcy Court in the Southern District of Florida when the company filed for Chapter 11 bankruptcy protetion on June 9.
At the core of the dispute between the bankers and Fountainebleau is whether the developer defaulted on the project.
The lenders claim in their filing that Fontainebleau defaulted in early March, even though the banks have not served the project with a notice of default.
“The lenders believe that Fontainebleau ... was in default under the credit agreement” and made “materially inaccurate” representations to the lenders hiding the project’s “financial distress,” Tuesday’s filing read.
Fountainebleau officials rejected the banks’ allegations in a Tuesday filing, arguing that “the banks’ attempt to inject issues of potential defaults ... is nothing more than a side show.”
Fontainebleau Las Vegas officials have maintained there was no default and, even if there had been, the banks were not permitted to pull funding under terms of the loan agreements, the developer said.
Contact reporter Arnold M. Knightly at email@example.com or 702-477-3893.