Future of bankrupt casino unclear

Wednesday, Sept. 8, 1999 | 10:29 a.m.

ATLANTIC CITY -- The two largest Sands Hotel & Casino bondholders remained divided Tuesday over a plan of reorganization for the bankrupt property, the Press of Atlantic City newspaper reported.

The newspaper said the dispute leaves future control of the casino uncertain as it tries to emerge from Chapter 11 bankruptcy protection.

Investor Carl Icahn supports the Sands' plan to give bondholders complete ownership of the casino, along with $80 million in new bonds.

In Las Vegas, Icahn controls the Stratosphere and Arizona Charlie's hotel-casinos.

Merrill Lynch Asset Management opposes the Sands' plan. It says bondholders should get more bonds and less equity, the Press of Atlantic City reported.

Because Icahn and Merrill Lynch each control more than one third of the Sands bonds, each has the power to block a plan of reorganization.

"We have two diametrically opposed bondholders. One either has to blink or sell out to the other, or your honor is going to have to make a decision," Sands lawyer Paul DeFilippo told U.S. Bankruptcy Judge Judith Wizmur on Tuesday, the newspaper reported.