Friday, June 14, 2002 | 11:13 a.m.
CHICAGO -- The village of Rosemont and five companies that did work at a proposed casino site in the Chicago suburb filed a lawsuit Thursday to force Emerald Casino Inc. into bankruptcy and put its gambling license up for bid.
Rosemont attorneys claim Emerald owes the village $44 million for breaching a lease agreement. The five businesses claim they are owed an additional $2 million in fees and expenses.
"Rosemont, like any other creditor, is entitled to be paid," Robert Stephenson, an attorney representing the village, said.
The village wants U.S. Bankruptcy Court Judge Susan Pierson Sonderby to approve a reorganization plan that would let companies place bids for Emerald's license, subject to Gaming Board approval. Rosemont would either get the casino or be paid $300 million -- the amount Stephenson said it is entitled to under its lease agreement with Emerald.
Emerald's shareholders would be replaced under the plan, and any money remaining after creditors were paid would be put in escrow for the Gaming Board to dole out.
C. Barry Montgomery, an attorney for Emerald, said he was contacting bankruptcy lawyers and would have no comment. Montgomery said Emerald had no warning of the filing.
The casino company is fighting the Gaming Board for its license in an administrative hearing. The board wants to revoke the license following its January 2001 decision denying Emerald's request to move from a shuttered boat in East Dubuque to Rosemont. Gaming Board officials say top Emerald officials lied to board investigators and that some shareholders had mob ties.
Administrative Law Judge Herbert Holzman postponed testimony in that case Thursday after Rosemont announced its filing. Emerald attorneys said they want the bankruptcy judge to rule on whether the filing requires the administrative hearing to be put on hold.
"The bankruptcy filing should not interfere with the progress of the disciplinary hearing to revoke the license and will not deflect the Illinois Gaming Board from the exercise of its lawful regulatory authority with respect to Emerald Casino Inc.," Gaming Board Administrator Philip Parenti said in a statement.
Rosemont Mayor Donald Stephens has long implored the Gaming Board to accept a settlement to end the case and get a casino running in his village.
The board rejected multiple offers this year that would have let Las Vegas casino giant MGM MIRAGE buy Emerald's license for $615 million, with a chunk of the profit going to the state. Attorney General Jim Ryan has threatened to block any settlement.
MGM withdrew its offer last week, claiming it was no longer viable after state lawmakers approved raising casino taxes to as much as 50 percent in some cases.
Rosemont already had sued Emerald in Cook County Circuit Court, claiming casino officials had breached their contract with the village by lying to Gaming Board officials and putting the license in jeopardy.
That lawsuit and any others naming Emerald as a defendant are automatically put on hold by the bankruptcy filing, Stephenson said.
"We think this is a way of putting all of the disputes that are at issue ... into one proceeding, and we will avoid years of litigation," he said.
Gaming Board rules require casino licensees to be financially viable. But Stephenson said the bankruptcy filing should not affect that requirement because the company's financial status has not changed significantly for three years.
Others involved in the lawsuit are: the partnership of Degan & Rosato and Power Construction, Christopher B. Burke Engineering Limited, Testing Service Corp. and Mackie Consultants Inc.
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