Less than two years after it opened, the Lucky Dragon’s hotel is set to close and the property again faces foreclosure.
U.S. Bankruptcy Judge Laurel Babero on Thursday approved the Las Vegas resort’s motion, filed last week, to shutter its nine-story hotel tower. The building is expected to close Oct. 2 and follows the January closure of Lucky Dragon’s casino and restaurants.
Babero also approved a motion by Lucky Dragon’s main creditor, Snow Covered Capital, that clears the way for a foreclosure sale.
A number of prospective buyers – including SLS Las Vegas owner Alex Meruelo and the operators of slot-parlor chain Dotty’s – have shown interest in the bankrupt off-Strip resort, according to management. But its full shutdown would mark a swift ending for the first hotel-casino built from the ground up in Las Vegas since the recession.
“The news is in the paper; the employees are aware that we’re looking to close,” Lucky Dragon lawyer Sam Schwartz said at Thursday’s hearing.
He added that he suspects the foreclosure sale will be held the third or fourth week of October.
The Chinese-themed Lucky Dragon, 300 W. Sahara Ave., opened in November 2016 with its hotel and casino in separate buildings. The owners struggled to draw big crowds, faced foreclosure and then filed for bankruptcy protection in February.
Snow Covered Capital, which issued loans for the project, said in court papers this week that the Lucky Dragon has posted operating losses of roughly $200,000 per month throughout its bankruptcy case, and that there is “no dispute” the resort’s operations “have been a dismal failure.”
Lucky Dragon developer Andrew Fonfa’s group held an auction Sept. 10 to sell its assets and pay creditors. Snow Covered Capital – an obscure company linked to San Francisco real estate investor Enrique Landa – emerged as the winning bidder for the boutique resort’s real estate with a credit bid, court filings say.
The developers “presented several qualified bidders from across the globe” at the auction, including Trans World Corp., The Meruelo Group and Dotty’s, but Snow “increased its credit bid” and removed “any possibility of selling the assets to a third-party,” Schwartz wrote in a court filing last week.
Schwartz, a shareholder with Brownstein Hyatt Farber Schreck, said at Thursday’s hearing that Trans World made a cash offer. He did not say the price.
“We don’t have to be here today,” Schwartz told the judge. “We don’t have to be here fighting about credit bids, and value and where things go. … We had a cash buyer.”
He also indicated that Trans World increased its offer Thursday morning by $2 million.
Trans World and Dotty’s could not immediately be reached for comment.
The Meruelo Group’s namesake founder, for one, has experience buying distressed assets. He acquired the bank-owned Grand Sierra Resort in Reno in 2011 for $42 million, after the previous owner paid $150 million for it.
The SLS, at the Strip’s northern edge and a short walk from the Lucky Dragon, hadn’t turned an annual profit since it opened in 2014 and was hamstrung by high debt and low guest activity. Meruelo, who closed his purchase of the 1,600-room hotel-casino in April, has said he would pump up to $100 million into it.
Meruelo Group spokesman Christopher Abraham declined to comment on the company’s interest in Lucky Dragon.