Receiver sued

Monday, Sept. 25, 2000 | 11:12 a.m.

NevStar Gaming and Entertainment Corp. of Las Vegas has sued the former receiver of its Mesquite Star hotel-casino, claiming the receiver's actions forced its March closure and second bankruptcy filing.

The lawsuit, filed as part of NevStar's pending Chapter 11 bankruptcy case, accuses Virgin River Casino Corp. and owner Randy Black of misusing its position as court-appointed receiver. Virgin River is the operator of two competing hotel-casinos in Mesquite.

As court-appointed receiver of the Mesquite Star, Black closed the Mesquite Star on March 8, saying the property was insolvent and creditors were unwilling to provide the funds to keep it going. NevStar's first bankruptcy petition was dismissed several weeks later, but the Mesquite Star remains closed and its gaming license has expired.

In the lawsuit, NevStar claims Black transferred the Mesquite Star's employees to his company, then transferred patrons to properties he owned.

In April, Virgin River purchased $5.5 million in debt held by primary creditor First Credit Bank at a discount, then attempted to sell the property at a foreclosure auction. As a result of this attempt, NevStar said it was forced to again seek bankruptcy protection in July.

"Black's actions as court appointed receiver were intended and designed to reduce the value of the property ... in order to allow Black, in concert with Virgin River, to purchase the debt ... at a substantial discount," NevStar's filing said.

NevStar is asking the court to subordinate Black's debt to that of other debtholders. It is also seeking unspecified monetary damages.

Black could not be reached for comment.

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