Court approves Castaways loan

Friday, Aug. 8, 2003 | 11:07 a.m.

The bankrupt Castaways hotel-casino received court approval Thursday for an additional $200,000 from a primary lender.

The additional funding from Vestin Mortgage comes a few weeks after the lender agreed to forward an additional $2 million to the Castaways, which filed for Chapter 11 bankruptcy protection in June.

A portion of the loans will be used to pay off a $1 million emergency loan Castaways received from USA Capital. USA Capital had sought to provide the additional $1 million but Vestin protested, saying it was unwilling to lend more funds to the money-bleeding property.

The deal has preserved Vestin's position as the first priority lender in the bankruptcy proceedings. Vestin is owed another $7.5 million from a $20 million loan it arranged for the Castaways to allow it to invest in a planned conversion into a Holiday Inn franchise.

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