Creditors file bankruptcy petition against Greek Isles

By Steve Green (contact)

Published Tuesday, April 7, 2009 | 9:25 a.m.

Updated Tuesday, April 7, 2009 | 5:21 p.m.

A group of creditors filed an involuntary Chapter 11 bankruptcy petition Monday asserting claims against the 202-room Greek Isles Hotel & Casino on Convention Center Drive in Las Vegas.

The petition was filed in Delaware against GIH-SPE II LLC, an investment group.

The creditors propose to install DI Development Group managing member Harold Rothstein as the property's principal operating officer.

Creditors include ICAG Inc. of Henderson, owed $4.95 million; Windy Point Properties, Silverdale, Wash., owed $1.47 million; Dawn Place LLC of Silverdale, Wash., owed $522,499; Foch Investments of Los Angeles, owed $607,755; Hayner Group, Pitsburgh, owed $232,050; Beresford Bancorporation of Britton, S.D., owed $704,711; Bigwall LLC of Scottsdale, Ariz., owed $847,316; Frank O'Donnell of Las Vegas, owed $958,641; and Economy Currency Exchange, Chicago, owed an unclear amount.

It wasn't immediately clear how the bankruptcy relates to a lawsuit filed in Clark County District Court this year against GIH-SPE II by lender Canpartners Realty Holding Co. IV, which succeeded in having receiver John Groom appointed to run the property. Groom, a longtime executive in the gaming industry, is currently chief executive officer of Epic Gaming LLC in Las Vegas.

Groom could not immediately be reached for comment about the Greek Isles, where gaming is operated by United Coin Machine Co.

Canpartners, which loaned the property $56 million in 2007, sued to take over operations in January. It charged in its lawsuit that the borrower was in default on the loan and that the owner and its casino management company were mismanaging the property.

Canpartners alleged the Greek Isles wasn't being properly maintained and wasn't paying its bills promptly, opening itself up to liens. It claimed customers and potential customers were being scared away by comments by management that the property was being foreclosed on and would be imploded. It said the Greek Isles had recently lost a contract with Delta Air Lines to house its crews during layovers in Las Vegas. Canpartners said the property's management company, Convention Center Drive Hotel & Casino, had hired a sister company, Mark IV Hospitality Inc., as the hotel manager and that Mark IV was being overpaid for its work.

Canpartners isn't the only company suing the Greek Isles.

A company called Palomar Advisors LLC last year sued GIH-SPE I LLC, DI Development Group and Rothstein, claiming Palomar had agreed to buy the Greek Isles in 2007 for $95 million, but couldn't close on the deal because the defendants failed to provide needed financial information and because Rothstein was involved in disputes with unnamed lenders. The defendants haven't responded to that suit and Rothstein could not be reached for comment.

Also suing DI Development, GIH-SPE and a company called Hi-Tops Hospitality group was Jones Lang LaSalle Inc., which claims it's owed $153,000 for work it did on the property. The defendants have not yet responded to that suit.