LV entertainment firm target of lender’s suit

Grace Leong

Friday, Nov. 26, 1999 | 10:47 a.m.

Imperial Credit Commercial Mortgage Investment Corp. of Los Angeles sued On Stage Entertainment Inc. of Las Vegas and Chairman and Chief Executive John Stuart, alleging they, as guarantors for its five companies, defaulted on more than $13 million in loan payments.

In a Clark County District Court suit, Imperial Credit said it agreed in March 1998 to lend a total of $12.5 million to three companies: $6.6 million to Fort Liberty Inc., $5 million to King Henry's Inc. and $900,000 to Wild Bills California Inc., in exchange for a promissory note secured by a mortgage or deed of trust on property the companies own in California and Florida.

Imperial Credit said it amended the loan agreement in June 1998 to further lend two affiliated borrowers $1.1 million: $1.075 million to On Stage Entertainment Theaters Surfside Beach and $25,000 to On Stage Entertainment Theaters North Myrtle Beach.

The suit said On Stage, as guarantor and parent company of all five borrowers, further amended the loan agreement in September 1998 to raise the amount lent to Surfside Beach to $1.625 million from $1.075 million.

Imperial Credit also accused Stuart of using On Stage's assets to pay for personal legal fees and to advance himself more than $250,000 and to enter into a financially improvident option arrangement with a lender, DYDX Legends Group, in exchange for the dropping of Stuart's personal debt of $1.78 million.

Imperial Credit said Stuart also used On Stage's assets to pay loans, association dues, insurance, taxes, maintenance and utility fees for seven personal condominium units in Atlantic City.

On Stage had used a $20 million credit line from Imperial in 1998 to acquire several productions and properties.

On Stage's Stuart could not be reached for comment.

Similar claims against On Stage were leveled June 28 by First Security Bank, which sued On Stage and several subsidiaries in Clark County District Court, alleging they defaulted on a $1.03 million loan and several lease agreements totalling $925,913; and alleging fraudulent transfer of assets.

And On Stage's first-quarter 1999 net losses widened to $884,000, from a loss of $529,000 a year ago.

On Stage operates shows around the nation including the Legends in Concert production at the Imperial Palace hotel-casino.