Judge OKs World Trade Center sale

Grace Leong

Friday, March 30, 2001 | 11:24 a.m.

A probate court judge on Thursday approved the $14.1 million sale of the 310-room World Trade Center to the Las Vegas Convention and Visitors Authority, rejecting efforts by the widow of late hotel owner Leonard Shoen to block the deal.

The hotel is open, but LVCVA attorney Luke Puschnig said it will close April 30.

"The LVCVA's current plan is to demolish the hotel and put a parking lot in its place. The small office building beside the hotel will be retained and leased to contractors that dismantle and build trade shows in the convention center. We're also keeping the warehouse."

The LVCVA, which wants the property on Desert Inn Road to accommodate operations and possibly future growth of its nearby Las Vegas Convention Center, approved on Jan. 9 the purchase of the hotel.

The LVCVA made an initial offer of $10 million at a Sep. 14 auction of the hotel, but raised its offer to $14.1 million after hotel owner Amerco Entrepreneurial Institute Inc. (AEI), which was recently renamed Las Vegas Trade Center Inc., received an appraisal of $14.34 million.

Shawn King, an administrator of the estate of the late Leonard Shoen, founder of moving giant U-Haul International Inc., said he sought court approval for the hotel's sale because AEI is "insolvent and losing more than $5,000 a day for every day it remains open, and has more than $3.7 million in debt past due to creditors, with another $4 million in debt (allegedly) coming due in April 2002."

AEI allegedly owes more than $10 million to Leonard Shoen's estate for loans he made to AEI, and also owes more than $12.2 million to his children, King said.

"If the (hotel) is not sold, the estate will remain open indefinitely, while its debt continues to accrue interest," King warned. "Leonard Shoen's estate currently owes its creditors over $1.8 million, and the only asset the estate has from which it can pay those obligations and any of the administrative expenses, is from the proceeds of Leonard's investment in AEI."

But Carol Shoen, the widow of Leonard Shoen, is in a protracted legal battle with his children and King over whether the hotel should be sold for the proposed $14.1 million and how the sales proceeds should be split.

Carol Shoen said she is protecting her claim to voting rights to half of the stock of AEI and to the proceeds of the hotel's sale by fighting alleged attempts by hotel creditor Katabasis Inc. to pressure AEI into quickly selling the property at what she considered "far less than its true market value." Katabasis is owned by Samuel Shoen, one of Leonard Shoen's children.

Carol Shoen, who said the World Trade Center was appraised as a hotel-casino at $22 million, argued she is the current owner of one-half of AEI's voting stock because under Nevada law, property acquired during marriage is presumed to be community property.

But Probate Judge Gene Porter on Thursday rejected Carol Shoen's claims to AEI, citing a pre-nuptial agreement signed Jan. 14, 1983, in which Leonard and Carol Shoen agreed that after their marriage, each party will be separate in property.

"The judge ruled that she has no community interest in AEI, and that King has a right to vote 100 percent of AEI's stock during the period of probate, regardless of Carol's wishes," said Mark Kemp, Carol Shoen's attorney. "The ruling also completely disregards Leonard Shoen's last will and testament, which states 'any assets ... that (he) possess in (his) name or in law at the date of this will are community property.' "

Porter also denied a request by Kemp to stay the hotel's sale pending a possible appeal by Carol Shoen to the Nevada Supreme Court on her claim that the stock is community property and that she has the right to control half of the voting stock.

Mark Solomon, Shawn King's attorney, in court papers filed March 9, argued that Carol Shoen isn't entitled to vote the stock because she is not a shareholder of record under Nevada law, and even if the court permitted her to vote half of the AEI shares, "an impasse would be created, still requiring the action of the court to resolve whether the (hotel) must be sold to satisfy the debts and other (competing) obligations of AEI and Leonard Shoen's estate."

Solomon said King has received an offer from AEI's creditors to discount their debts in consideration for a quick payoff from the proceeds of the hotel's sale. He said this offer, which is subject to approval by the probate court, is expected to generate $4 million to $5 million for Carol Shoen and enable the estate to pay its expenses and close.

But Carol Shoen, who said both she and her late husband's estate are owed $10.279 million and accused King of "rigging the books" to evade her right to vote her stock, alleged King had proposed a settlement that will allow Shoen's children to be paid in full their alleged $9.5 million loan, while she is left to settle for only about half her loan.

David Atwell, a hotel broker who represented the LVCVA, said "This is a very complex matter. But under the circumstances, $14.1 million is a very fair price. The property has been plagued with problems since the day it was built. We handled a previous sale on it a few years ago when it was called The Chaparrel Hotel, and it had more than its share of problems then."

"The hotel has never been profitable and this sale is probably the best that could happen for all concerned. We are glad the court made this decision," he said.