Icahn accused of withholding Arizona Charlie’s papers

Brian Seals

Thursday, June 11, 1998 | 11:25 a.m.

The battle for control of Arizona Charlie's raged on Wednesday with the neighborhood casino's lawyers complaining they have been unable to obtain documents from would-be owner Carl Icahn's high River L.P.

Attorneys of three parties vying for control of the hotel-casino are finalizing information in anticipation of confirmation hearings set to begin June 18.

Arizona Charlie's lawyer John Clemency said he had yet to receive numerous documents requested from High River such as an interest rate and financial analysis High River used when it bought Arizona Charlie debt.

"Perhaps Mr. Icahn has perfected the paperless office," said Frank Morello, also representing Arizona Charlie's.

But High River attorney Ed Weisfelner said the billionaire Icahn isn't a typical investor. Icahn apparently bought the debt through a brokerage without seeing an economic analysis, he said.

"Those documents don't exist," said Weisfelner.

Whatever documents do exist will have to be turned over to opposing attorneys by June 15. A company failing to do so risks its plan being denied.

"If I discover any documents have not been turned over or destroyed, I'm going to deny confirmation as a sanction," Bankruptcy Judge Linda Riegle said.

Riegle also ruled High River's gaming counsel will be allowed to testify during confirmation proceedings about how High River's plan would be implemented if approved -- despite objections by attorneys for Arizona Charlie's owner Becker Gaming.

Las Vegas attorney Jeff Silver is serving as High River's gaming counsel. Clemency and Morello protested Silver being able to testify, saying his capacity with High River would make him an advocate rather than a testimonial expert.

"What Mr. Silver will add is basically his guess about what gaming regulators will do," Clemency said.

Riegle sided with High River on that issue, saying such testimony may not be allowable before a jury but this case is only before a judge who wouldn't be prejudiced by statements made by an attorney.

With that ruling, though, came an order that High River will have to turn over documentation related to that testimony. Specifically, that will be documentation about the Icahn company's gaming applications for the bankrupt Stratosphere hotel-casino, which Icahn gained control of last month. Riegle ordered that information be submitted only to attorneys involved and not any clients, though.

Becker Gaming attorneys have criticized the High River plan because it could involve interim casino management on a lease basis until Icahn is approved for a gaming license.

Likewise, High River attorney's have criticized Becker Gaming's plan to retain the hotel-casino because it hinges on a loan to pay off creditors. Clemency submitted a letter from United Healthcare Financial Services stating the loan has been arranged with closing to occur June 30.

Aside from Becker Gaming and Icahn's High River LP, Station Casinos has also submitted a plan to gain control of Arizona Charlie's. Station is offering $52 million for the property. Becker Gaming is offering two options to debtholders: A one-time prorated $55 million payment or a $43 million initial payment followed by a later $19 million payment. High River is offering a $52 million prorated payment to noteholders.

High River owns about 51.3 of the 258-room hotel-casino's mortgage debt. Arizona Charlie's declared bankruptcy last November.

Debtholders have been sent ballots on their preferred offer and those votes are due Friday. Confirmation hearings are set June 18-19 and June 24-25. Riegle will consider both the vote and various other factors related to the viability of the plans in determining which one wins.