Plan to sell bankrupt Las Vegas Strip resort postponed

Tuesday, April 16, 2002 | 9:26 a.m.

U.S. Bankruptcy Judge Robert Jones rescheduled a hearing in Las Vegas for a third time - this time to April 29 - for the Aladdin to outline plans for a court-supervised sale of the estimated $1.2 billion hotel-casino.

Aladdin attorneys are trying to reach agreement with the casino's secured and unsecured creditors on how a sale should be conducted.

An expedited sale could mean that many of the Aladdin's unsecured creditors would not receive anything after the property's secured creditors are paid off.

Attorneys for the resort and its creditors said Monday that the sale of the resort isn't driven by a time frame.

"As long as the cash flow is positive, the debtors (Aladdin) can take time (to sell)," said Frank Merola, attorney for the Aladdin's unsecured creditors, after the hearing. "There's no rush to sell the property. I think the consensus at this point is that the market will drive the sale."

Aladdin attorney William Noall said after the hearing that he thinks the court will approve the sale proposal because the key players agree how the sale should proceed.

"The property is already being marketed," he said.

However, Noall and the judge disagreed during a hearing last week on whether a trial scheduled for May 8 involving a dispute between the Aladdin and an onsite power plant operator would affect a sale.

Northwide Aladdin LLC, which built and operates a power plant that provides ice, hot water and backup electricity to the resort for $500,000 per month, filed a claim with the court last month saying the Aladdin owes it $3 million for services.

Noall said again Monday that the trial's outcome would not affect a sale.

The 2,567-room Aladdin opened in August 2000 and filed for Chapter 11 protection in September 2001.

The proposal to sell the Aladdin has been characterized by hotel-casino officials as a process to allow the property time to locate and negotiate with buyers. The court would approve the best offer.

The Associated Press has reported that Los Angeles-based Colony Capital, which operates the Resorts Atlantic City hotel-casino in New Jersey, submitted a $350 million to $500 million bid last month for the Aladdin.

The proposed sale process has drawn fire from various creditors, including GE Capital Corp., the property's second-largest creditor with a claim of about $70 million for equipment and slot machine loans, and the resort's unsecured creditors.

The Bank of Nova Scotia and other Aladdin bankers are owed about $435 million, with a deed of trust on the property as collateral for their loans.