Judge OKs exit pay for Regent execs

David Strow

Wednesday, March 21, 2001 | 11:14 a.m.

Twenty-four top executives and managers at the Regent Las Vegas will be eligible to receive as much as $1.35 million in retention and severance benefits upon the sale of the bankrupt property, under a plan approved by a federal bankruptcy judge Tuesday.

Regent attorneys and officials argued the plan is necessary to retain key employees through a period of great uncertainty. Without it, they said, the Regent would face a flood of high-level defections as the property nears a sale.

"We know there will be a significant change in ownership, and new ownership frequently wants new management," said Frank Merola, attorney for the Regent.

The Regent's chief operating officer, vice president of finance, vice president of human resources and vice president of hotel operations are each guaranteed six months' pay -- $293,000 in all -- if they stay in their positions through the closing of a sale or the end of the Regent's bankruptcy protection. The most notable exclusion was Regent Chief Executive Darrell Luery, who opted out of about $350,000 in potential severance and retention benefits.

Also unusual was the granting of three-month retention bonuses totaling $355,000 to 20 management-level employees at the Regent, from director of catering to executive housekeeper. This usually isn't done in casino bankruptcy cases, but the Regent isn't a typical case, as it is recording negative cash flow and is only being kept open by a $20 million bridge loan from creditors. Those funds should be exhausted by the end of July, according to the hotel-casino's financial projections.

If the property isn't sold by then, Regent officials and attorneys made it clear the property may have to be shut down.

"Unlike many hotel/casino Chapter 11 cases, there is a real uncertainty as to whether the debtors even will be operating past summer 2001," Jeffrey Truitt, an official with KPMG, said in an affidavit filed with the court. "In most other gaming bankruptcy cases, there is either minimal concern that the property will be closed ... or if the property is slated for sale, there is a good likelihood that the property will remain open and the potential acquirer has or will announce its intention to retain the (management-level) employees."

The plan also provides severance pay of six months for the top four executives, and three months for the 20 managers, totaling $689,500. However, the employees will be ineligible to receive further severance pay upon accepting a new job.

The next significant step in the Regent's bankruptcy will be the announcement of the first formal bidder for the property. Two entities have already submitted preliminary purchase proposals with the Regent, though neither has been identified. The identity of the early leading bidder should be announced within several weeks.

Following this announcement, Regent officials will then attempt to solicit competing bids in an attempt to drive up the final sale price. A sale is contemplated no later than July, though there is also the possibility a party could emerge with plans to refinance the property.

More than $300 million is owed to creditors. But a figure of $100 million for the property's sale was bandied about often in Tuesday's court hearings.

"That's a number being talked about a lot with respect to an initial bid," Merola said.