Tuesday, April 28, 1998 | 9:57 a.m.
Financier Carl Icahn and Station Casinos won a battle Monday in their separate campaigns to take over the bankrupt Arizona Charlie's hotel-casino.
U.S. Bankruptcy Judge Linda Riegle ruled Icahn and Station Casinos can submit their reorganization plans to the resort's creditors for approval at the same time Arizona Charlie's submits its plan.
The ruling partially overturns Riegle's April 13 ruling that Arizona Charlie's was the only entity with the right to have a reorganization plan on the table until May 14, when a statutory deadline ends. Under Monday's ruling, all reorganization plans are due by May 8, and will be sent to creditors in a single package on May 18.
"I think it's appropriate to let the plans go out together," Riegle said.
Without the revised ruling, Arizona Charlie's likely would have sent its plan to creditors within the next few weeks, while the Icahn and Station Casinos plans would not have been sent until late May. Riegle said she wanted to ensure creditors are aware there are competing reorganization plans, and are given a chance to fully weigh the relative merits and weaknesses of each.
Riegle acknowledged she was giving in to the demands of Arizona Charlie's major creditors, and put attorneys representing Ichan and Station Casinos on notice that any delays would not be tolerated.
"You've got what you want now," Riegle told the attorneys. "So you'd better come and do it."
Since Arizona Charlie's filed for bankruptcy protection in November, Icahn has bought 51 percent of the company's debt, making the billionaire the resort's largest creditor. Other major creditors include Bankers Trust and IBJ Schroder Bank and Trust Co.
Arizona Charlie's is owned by Becker Gaming Corp.
Arizona Charlie's plan calls for repaying secured bondholders -- such as Icahn, BT and IBJ Schroder -- $44 million to $45 million of the company's $55 million in debt. Several other claims against the company would be paid in full, including administrative claims totaling $1.3 million, gaming equipment claims totalling $2.4 million, taxes and smaller claims totalling $560,000, and trade vendor claims totalling $2.3 million.
The company's plan calls for settling a separate unsecured $17 million to $19 million claim filed by Arizona Charlie's debtholders with a 10 percent cash payment on the date the company leaves bankruptcy, or a 50 percent payment spread over several years. Personal injury claims of $270,000 would be settled on the same terms.
Icahn has said he will vote against the Arizona Charlie's plan. Details of the Icahn and Station Casinos plans were not available.
Under bankrupcty law, reorganization plans are proposed in disclosure statements -- lengthy documents detailing a bankrupt company's business and explaining how it will settle its debts. The statements are first distributed to major creditors, who are given an opportunity to comment.
After a disclosure statement is approved by a bankruptcy judge, it is mailed to the company's creditors, who vote whether to accept it. If creditors do not accept a plan, a judge can still force its implementation through a rare process known as cram-down.
Riegle said Arizona Charlie's plan can be sent to creditors, with minor revisions. But the statement can only be sent as part of a three-plan package on May 18, she ruled.
Riegle also ruled that Arizona Charlie's had properly set up its trade creditors -- suppliers of everything from gaming machines to food -- as a separate voting class. In a long hearing last week, attorneys for Arizona Charlie's creditors argued the separate classification was an attempt by the resort's attorneys to gerrymander creditor voting. Riegle found that Arizona Charlie's had a legitimate business reason to classify its trade creditors separately.
Riegle gave creditors and Arizona Charlie's attorneys alike a laundry list of items that should be listed in their disclosure statements.
Most importantly, Riegle said, plans filed by Icahn and Station Casinos should detail what is planned for the resort's future, and whether Arizona Charlie's will be closed for any period of time. Riegle noted that Ichan, if approved, will have to undergo a six to eight-month approval process by gaming regulators.
"I thinks it's extremely important that creditors know ... that with an Icahn plan, there cannot be confirmation for months and possibly years," Riegle said.
Confirmation is a legal term for final court approval of a plan. A casino reorganization plan cannot be confirmed until all regulatory approvals -- including Gaming Control Board and Gaming Commission approval -- have been received.
Icahn is also interested in controlling the bankrupt Stratosphere hotel-casino. The investigation of his suitability as a casino owner by state gaming regulators could cover his interests in both properties.
Riegle also said it is important that creditors be given an opportunity to decide whether they prefer someone they've dealt with in the past -- such as Becker gaming's Bruce Becker -- or a new force like Icahn.
"Is Icahn a corporate raider or is Ichan the savior of the day?" Riegle rhetorically asked.
The answer, she said, can only be determined through a side-by-side comparison of the three competing plans.
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