Judge to expedite Fontainebleau bankruptcy case

Published Wednesday, June 17, 2009 | 4:21 p.m.

Updated Thursday, June 18, 2009 | 9:31 a.m.

Fontainebleau Resort

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Lenders: Cost overruns led to Fontainebleau loan default (6-16-09)
Bank of America wants change in Fontainebleau bankruptcy plan (6-11-09)
Fontainebleau debt rating downgraded after bankruptcy (6-11-09)
Fontainebleau wants expedited hearing on $656 million (6-10-09)
Investment companies sue banks over Fontainebleau financing (6-10-09)
Australian company writes off Fontainebleau ownership interest (6-10-09)
Fontainebleau developer files for bankruptcy; more jobs cut (6-9-09)

A bankruptcy judge in Miami on Wednesday agreed to expedite the court's handling of a dispute pitting the bankrupt Las Vegas property against bank lenders that cut off funding for the $2.9 billion project, causing it to halt construction.

"We are very pleased that the court agreed to expedite our motion for partial summary judgment," Fontainebleau said in a statement. "Judge Jay Cristol ordered the banks to present their written arguments by July 1, with our written response due on July 7. We expect to have a hearing shortly after that to consider partial summary judgment and look forward to presenting our oral arguments."

An attorney for Bank of America -- and for other banks being sued by the resort over their decision to stop funding for construction this spring -- has not responded to a request for comment.

Fontainebleau wants the court to order the banks to release $656 million it says is needed to get the project back on track. The bank lenders say they cut off funding because Fontainebleau defaulted on its construction credit agreement because of cost overruns and other problems -- a charge denied by Fontainebleau.

A report in the Miami Herald said Cristol rejected a request by the banks that they be given three to four months to conduct discovery, with the judge saying such a delay would jeopardize funds already invested in the 70 percent-complete resort.

"What you're talking about is killing the project," Cristol said, according to the Herald. "We've got to do better than that."

The Herald reported the banks say the $800 million they had earlier committed to in a revolving credit facility will not be enough to complete the project, citing comments by Fontainebleau officials in April that projected costs had grown to be greater than the available funds.

"They're going to need substantially more, hundreds of millions of dollars more," Bank of America attorney Daniel Cantor told the court, according to the Herald. "Forcing the lenders to turn over money is not going to get this project fully built. We should not be forced to sink additional money into a project that is underfunded.''

Separately, creditor Young Electric Sign Co. (YESCO), which says it is owed some $18.7 million, filed a motion Wednesday to have the main bankruptcy case moved from Miami to Las Vegas.

YESCO said Fontainebleau Las Vegas LLC in its bankruptcy filing listed its 20 largest unsecured creditors holding $11.857 million in debt -- and that 60 percent of that debt is owed to six creditors in Las Vegas. Of the creditors, 705 are in Las Vegas compared to 93 in Florida, YESCO said.

"The vast majority of the parties impacted by the debtors' bankruptcies and the outcome thereof reside in Las Vegas," YESCO said in court papers. "This includes hundreds of debtors' creditors, contractors and employees."

YESCO said the case should be transferred to Nevada in the interest of justice and for the convenience for the parties.

A Fontainebleau spokesman said the company would address YESCO's motion in court.

The case was filed last week in Miami because that's where the Soffer family's Turnberry development organization is based.

Besides co-developing Fontainebleau Las Vegas, the Turnberry companies are known for developing several high-rise condominiums as well as the Town Square shopping center in Las Vegas.

A June 30 hearing was set on YESCO's motion to move the case to Nevada.

Discussion: 4 comments so far…

By rodtig

6/18/09 at 10:15 a.m.

Suggest removal

What a mess!!! While this disaster goes back and forth in court filings,the only people who gain is the lawyers.Lets look at the real cause of all this The Economy.8 years ago the banks would have shoveled all the money Fountainbleau needed to keep moving.The banks are to blame for the countries economic situation.They need to fix it and cutting off funds is the disasterous thing to do.Look at the construction workers out of work,thousands.Look at the operations jobs put on hold,thousands.Look at the families effected,Thousads.Look at the money not being spent here by thoe thousands.real smart Banks.
By rodtig

6/18/09 at 10:26 a.m.

Suggest removal

Hey Las Vegas citizens we need to get behind Fountainbleau and support them.This towns small busineses are feeling the effects from this disaster.Boycot Bank of America and any other financial institution involved.Maybe a good idea.Las Vegas's economy is being hurt by these Banks.Why is there always no comment from Bank of America hmmmmmm good question. maybe they know they are wrong and hurting this town.YESCO talk to Fountainbleau and cut a deal.Don't delay this project anymore.People out here are straving for jobs.Fountainbleau cut a deal with YESCO.
By rodtig

6/18/09 at 10:41 a.m.

Suggest removal

The only person involved in this disaster taht I believe understands tihs situation is Judge Cristol in Florida. I hope he slams Bank of America.B of A's new name should be Bank of Self or Bank of We Don't Care about People.I wish our government had not bailed these large Banks out.They need to go under or be split up one.Las Vegas citizens need to really look at B of A's true intentions and realize they don't care that families of the construction workerss are suffering B of A how many other projects have you caused to be shut down.Cough up they monies needed to finish this and other projects.As part investor in you Yes I have invested in you the minute you took federal money so as the rest of the American citizens who pay taxes
By VegasHorseman

6/18/09 at 2:21 p.m.

Suggest removal

As one of the Layed Off Workers I say "Great". The action of the Banks is nothing but an effort to drag this out and devalue the project. Then when the time is right, jump in, buy it up at pennys on the dollar and make a killing. The Judge can see this and made the correct decision. I aggree that B of A should be held accountable. The day after I was layed off, my wife tried to find B of A CEO's email so she write him and tell him what his actions are doing to our Family.

I still wonder if a Class Action Suit by all the layed off workers, suppliers and others affected by the shut down might not be a good idea. If there are any Lawyers out there, tell me why we can't file our own suit. Something needs to be done to these banks. Since I payed my Taxes and some went to bail them out, I want it back.

This is not the; Owners, Consultants, Contractors, Unions or Managements Fault. This lies completly with the Banks.

I would really like to finish the Bleau. But the longer this thing goes on, the more likely I will have to seek work else where. My unemployment does not even cover my rent. I know others that I have talked to feel the same, but they are starting to leave town. As with any project, there were some losers on the job. But as a whole, the people building the Bleau were a very good crew.

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