Greek Isles Hotel forced into bankruptcy

The majority owner of the Greek Isles Hotel blamed "greedy hedge-fund guys" interested in wiping out the current owners' equity stake for pushing the property into Chapter 11 bankruptcy Monday.

Harold Rothstein said the Greek Isle's creditors have already taken $14 million in fees and interest out of the property since the financial markets collapsed.

"The ownership of the property was negotiating in good faith to reorganize and reposition the property," Rothstein said. "Even though the plan that was presented (to the creditors) was a plausible plan, the New York hedge fund is still acting like it was two years ago. They're trying to play the big, bad wolf."

The hotel, casino, restaurant and showroom will remain open during the bankruptcy, Rothstein said.

The Greek Isles bankruptcy, which was filed in Delaware, comes eight months after the property's owners defaulted on a $56 million loan.

The property has been under the direction of a court-named receiver since early February.

Loan holder Canpartners Realty Holding Co. IV filed a lawsuit in January asking for a receiver to take over the hotel's operations from Mark IV Hospitality, an Illinois-based hotel operator that Rothstein claims has mismanaged the property.

A call to the current management was not returned.

The $56 million loan is controlled by Los Angeles-based Canyon Partners and Bronx, N.Y-based Spectrum Management. Neither firm could be reached for comment.

The property is owned by GIH-SPE II, an investment group led by Rothstein that purchased the 6.1-acre property for $48.8 million plus debt in July 2007.

The off-Strip Greek Isles was formerly the Debbie Reynolds Hotel.

The 102-slot machine casino is operated by United Coin Machine Co. under a lease agreement.

The largest claim against the property is a $4.95 million loan by Henderson-based ICAG Inc., according to the Nevada secretary of state's Web site

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.