Monorail plan to split debtors

The Las Vegas Monorail's bankruptcy reorganization plan, which calls for lopping off more than $600 million in debt, could hinge on $175,000.

The latter amount is what the nonprofit corporation proposes to pay individuals and contractors that keep the line running. By current estimates, they would receive payment of about 80 percent of their invoices, up to $175,000.

By contrast, holders of $658.8 million in bonds used to purchase the monorail in 2000 and then expand it to 3.9 miles, will see about 93 percent their holdings wiped out. Much of the legal argument at a Wednesday hearing in U.S. Bankruptcy Court, intended to start the process of voting on the plan, focused on whether it was fair to repay bondholders and trade creditors at sharply different rates.

Because the latest version of the plan and disclosure statement were filed barely a day before the hearing, U.S. Bankruptcy Judge Bruce Markell delayed action until June 20.

"I was really hoping to get the disclosure statement approved today and get it moving forward," Markell said.

The case has been inching along for nearly 18 months. The monorail and holders of $451.1 million in senior bonds say they are closer to a deal but still lack an agreement.

The terms for senior bondholders call for $44.5 million in IOUs, but if complex repayment terms are not resolved, bondholders attorney Philip Bentley said they would vote against the plan. Because they hold nearly all the debt entitled to vote, they could defeat the plan.

Bondholders also filed papers last week saying they would draw up their own plan if there's no settlement.

The monorail's value is far less than the senior bonds, so $207.3 million in bonds with lower repayment priorities are considered worthless.

Monorail attorney Gerald Gordon argued that the repayment plan is legal, and noted that even if all money allocated to trade creditors were spread among bondholders, they would receive less than a penny per $1,000 owed.

"We still believe our plan does not unfairly discriminate and it is fair and reasonable," he said.

The plan also notes the monorail must find tens of millions of dollars from undefined sources to pay for replacement of a lot of the hardware, with bills starting to come due in 2019. In addition, the monorail has long thought that extending the south terminus from the MGM Grand to McCarran International was essential to solving its long decline in passengers and revenues.

Monorail CEO Curtis Myles declined to comment on the future.

Contact reporter Tim O'Reiley at toreiley
@reviewjournal.com or 702-387-5290.