Maxim foreclosure auction delayed again

David Strow

Tuesday, May 9, 2000 | 10:12 a.m.

The foreclosure auction of the Maxim hotel-casino in Las Vegas has been delayed yet again, after a key witness fell ill just before a critical court hearing.

Clark County District Judge Nancy Saitta postponed a hearing Monday afternoon on whether Atlanta-based Meralex should be allowed to proceed with the sale of the Maxim. Meralex currently holds a $42 million mortgage note on the Maxim that is now in default. The hearing was rescheduled for Friday afternoon.

Three former shareholders in Premier Interval Resorts Inc. -- the current owner of the Maxim -- are suing Premier controlling shareholder Gary Kornman, Meralex and Meralex controlling shareholder Howard Jenkins, alleging Premier and Meralex collaborated to cause the Maxim's demise and foreclosure sale.

The sale, they contend, is the final step in this alleged scheme. As a result, attorneys for the men are asking for a court order blocking the sale to prevent funds from being moved out of state.

But the hearing on whether this order would be issued was stalled Monday after plaintiff Donald Saunders fell ill several days ago. Saunders is now heavily medicated and is unable to travel from his home in Newport Beach, Calif., said attorney Suvinder Ahluwalia.

"He is the most important witness in the presentation of our case," Ahluwalia told Saitta.

But Meralex attorney John Curtas argued that Saunders' testimony wasn't needed, and the case needed to proceed with all possible speed, given the "extraordinary consequences (delay) will have for the property ... and the 300 people employed by that property."

"This is costing my client $10,000 a day," Curtas said.

In court filings, Meralex attorneys have said Meralex will be forced to shut down the Maxim a second time if the foreclosure sale doesn't proceed quickly.

Meralex says it's losing $600,000 per month on the Maxim -- $300,000 in operating losses and $300,000 in lost interest on its note.

Given the emergency nature of Saunders' illness, Saitta delayed the hearing until Friday, but told his attorneys that Saunders would have to provide testimony through an affidavit if he could not attend this hearing.

Curtas said the foreclosure auction will be rescheduled for May 15, should the plaintiffs fail in their effort to stop the sale.

The Maxim closed Nov. 21 after its lessor, Ed Nigro, said Premier failed to provide $300,000 in financing needed to keep it open.

Meralex reopened the hotel in December, but gaming operations remain closed as Meralex does not have a gaming license.