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Judge OKs conversion of bankruptcy to Chapter 7

Thursday, Feb. 12, 2004 | 11:12 a.m.

A U.S. Bankruptcy Court judge this week approved the conversion of the Castaways bankruptcy case to a Chapter 7 liquidation from a Chapter 11 reorganization.

The conversion occurred after the Castaways' primary creditor, Vestin Mortgage, foreclosed on the property and creditors filed claims stating that they had a secured interest in certain assets, Vestin bankruptcy attorney Candace Carlyon said.

"The whole purpose of the (liquidation process) is to have an orderly way of (prioritizing) claims," she said.

Several creditors have since lined up to file claims senior to Vestin's on the property, including slot makers who have rented games to the casino for use on a revenue participation basis, Carlyon said.

The liquidation will have no bearing on the timing of Vestin's proposed sale of the property to an interested operator, she said.

In the days since the foreclosure sale, Vestin has received numerous calls about the Castaways from interested parties, spokesman Steve Stern said. He declined to name the parties or say what their plans were for the property. He also declined to say when a sale might be consummated.

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