Debbie Reynolds time-share owners worry about hotel’s fate

John Wilen

Monday, Nov. 30, 1998 | 11:30 a.m.

Months have passed since a World Wrestling Federation-led partnership won control of the Debbie Reynolds hotel-casino in a high-profile court battle.

The WWF partnership promised a wrestling-themed resort, an "in your face" kind of place.

Speculation about what the organization might do ran from placing statues of Hulk Hogan in the lobby (a fantasy that won't happen -- Hogan is associated with competitor World Championship Wrestling), to live wrestling matches in the resort's showroom.

But little has happened since then, and the WWF has yet to announce exactly what it will do. The resort is still the Debbie Reynolds hotel-casino, and the actress's signature remains on the building.

While the public's interest in the fate of the resort may have faded somewhat, time-share owners and former company shareholders remain on the edges of their seats, wondering what will become of their investments.

"God, can you imagine, walking into the lobby and seeing (and probably hearing) wrestling-related things?" exclaimed Paul Rooney, a time-share owner from Halifax, Nova Scotia.

"We really don't like their style of entertainment," said Linda Somsak, a time-share owner and shareholder of the Debbie Reynolds operating company who lives in Westminster, Calif.

The Debbie Reynolds, a 300-room Convention Center Drive resort with a 6,600-square foot casino and 500-seat showroom, has struggled financially since its opening in 1993. Management decisions to focus on time-sharing and to lease gaming space to a third party limited the resort's ability to generate enough cash to pay its bills.

It entered bankruptcy in mid-1997, after successive acquisition deals failed.

The WWF and Cleveland partner 905 Parkview Group LLC acquired the Debbie Reynolds through a bankruptcy auction and protracted court battle in August. The WWF, a doing-business-as moniker for Titan Sports Inc., of Stamford, Conn., ultimately paid $10.85 million for the property.

That figure included a $200,000 payment to David Siegel, a Florida time-share developer whose on-again, off-again interest in the Debbie Reynolds complicated the WWF's quest to purchase the resort. The $200,000 compensated Siegel in part for money he had put into the property to keep it running through bankruptcy.

Both Somsak and Rooney were disappointed when Siegel finally abandoned his quest for the resort. Siegle had planned to keep the Debbie Reynolds name and the resort's motion picture memorabilia theme, and to expand the property with new time-share units.

"I was pulling for David Siegel," said Rooney. "We were extremely excited, thinking we'd get in on the ground floor."

Now, both Somsak and Rooney regularly peruse the Web sites of Las Vegas newspapers, looking for clues to the Debbie Reynolds' future. Both understand the resort will undergo some dramatic changes. And both say their attempts to find out more from officials at the Debbie Reynolds and WWF have failed.

"We have never been contacted by anyone," said Somsak.

"They didn't contact us whatsoever," said Rooney.

According to a top WWF official, that's not by design.

"I do intend to eventually communicate with these folks," said August Liguori, chief financial officer of Titan Sports.

The problem, said Liguori, is that the WWF has not yet decided exactly what it will do with the resort -- let alone what its time-share policy will be.

"Most everything is up in the air," said Liguori. "We're actually trying to put all our plans together."

Two things are certain, Liguori said: the time-share agreements will be honored and the Debbie Reynolds will be reborn as a WWF-themed resort.

"The intention is to take care of these people and not hurt them," said Liguori.

The resort will be renovated, he said, though WWF officials have yet to decide whether that means it will temporarily close.

Despite the experiences of Somsak and Rooney, Liguori says he has talked to some of the resort's 1,100 time share owners.

"A couple I've spoken to were quite pleased that the WWF owns it," he said. "It's kind of a mixed bag."

Somsak is also concerned about the 8,100 shares of stock she and her husband own in Debbie Reynolds Hotel & Casino Inc., the public corporation that owned the resort.

Though all equity ownership in the Debbie Reynolds hotel-casino was transferred to the WWF partnership in the bankruptcy proceeding, the public corporation -- now a shell devoid of assets -- was to have been split among Siegel, the unsecured creditors and the existing shareholders. Siegel would have ended up with 92.5 percent of the company, the unsecured creditors 5 percent and the Reynolds shareholders 2.5 percent.

The WWF agreed to that arrangement as another way -- along with the $200,000 payment -- to get rid of Siegel. At the time, Siegel said he might use the public Debbie Reynolds company to take his private time-share development company, Central Florida Investments, public.

But the unsecured creditors -- Debbie Reynolds creditors owed for goods and services -- objected to that deal, said Lenard Schwartzer, the bankruptcy attorney that represented the resort. The creditors were concerned that Siegel was getting something out of the settlement, while they were not.

In bankruptcy cases, unsecured creditors and company shareholders are generally at the end of the list for compensation. Secured creditors like mortgage lenders get first crack at a bankrupt company's assets. Siegel is considered an unsecured creditor of the Debbie Reynolds, as the $250,000 he loaned the company was not secured with collateral. The other unsecured creditors are unhappy he is receiving most of the public shell, which could be valuable, while they are getting only 5 percent, said Schwartzer.

The unsecured creditors and Siegel are negotiating a deal under which Siegel would pay the creditors $25,000 in return for their share of the shell. Under that deal, Siegel would end up with 97.5 percent of the shell and the shareholders 2.5 percent.

The two sides have until Jan. 27 to finalize their deal.

If no agreement is reached, Bankruptcy Court Judge Robert Clive Jones is scheduled to hear arguments on the dispute that day.

Despite the concerns of shareholders like the Somsaks, Schwartzer said there is not really anything shareholders can do but wait and see what happens.

"There is nobody representing the stockholders because if the shareholders get anything, it's a gift," said Schwartzer.

But the same does not go for time-share owners, who actually own deed title to their interests in the resort. Liguori concedes that some of the time-share owners may not want to stay at a wrestling-themed hotel.

"The WWF may not be their cup of tea," said Liguori. "If they don't fit into the plan, it may well be that we have to buy them out."

However, Liguori stopped short of promising the WWF will buy dissatisfied time-share owners out, and noted that different needs and desires of different time-share owners may be best addressed by a variety of different plans.

"I don't have it nailed," he said. "We're really evaluating everything."

Meanwhile, the time-share owners are just waiting to see what happens.

"We won't really know until we find out what the changes are," said Somsak. "If the room stays the same, it's a place that we'll want to continue to come and visit."

Selling might not be a good financial option, she said.

"From what I've read, though, it looks like when you sell a timeshare you take a big loss," said Somsak.

Rooney is also in no hurry to sell.

"We would want to stay there," Rooney said. "Our first choice would be to stick with our initial investment, but we're just worried about what they're going to do with the hotel."

At least the WWF appears poised to put money into the resort, he said.

"If our place is still there, if it still looks great, then we'll close our eyes as we walk through the lobby, and that's where we'll stay," said Rooney.

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