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Friday, Nov. 20, 2009 | 3:14 p.m.
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Sun Archives
- Penn National’s bid sets up auction for Fontainebleau (11-17-2009)
- Fontainebleau subcontractors organize to finish project (11-5-2009)
- Fontainebleau developer plans appeal of rulings (11-2-2009)
- Subcontractors fall short in effort to move Fontainebleau case (10-26-2009)
- Executive named examiner in Fontainebleau bankruptcy case (10-16-2009)
- Fontainebleau president among execs leaving project (10-15-2009)
- Fontainebleau a symbol of bad timing, not the only victim (10-12-2009)
- Fontainebleau judge wants quick sale of bankrupt project (10-2-2009)
- In reversal, Fontainebleau lenders suggest liquidation (9-25-2009)
- Fontainebleau: Bank no longer ‘seeking to destroy’ project (9-17-2009)
Contractors that claim to be owed $424 million today objected to the Fontainebleau Las Vegas sales process in which Penn National Gaming could pick up the unfinished project for less than $102 million.
Fontainebleau attorneys have said that Monday's "stalking horse" bid by Penn National was the start of an auction process that hopefully would produce additional bidders.
But attorneys for the contractors, having reviewed the issue this week, asserted Friday that the sales motion proposed to Fontainebleau's bankruptcy court in Miami wasn't written to encourage competitive bids.
The contractors, represented by the law firm Gordon Silver in Las Vegas and the firms Shraiberg, Ferrara & Landau P.A. and Ehrenstein Charbonneau Calderin in Boca Raton and Miami, Fla., charged in a court filing that the proposed Penn-Fontainebleau sales process is flawed in that it doesn't allow the contractors to make a competing "credit bid" so they can acquire the project for what they're owed.
Several of the contractors, even before Penn National made its bid Monday, had been looking for financing and a partner to bid for the project because they feared a Penn bid wouldn't cover their liens.
Penn National offered to pay $50 million for the project, subject to adjustments downward of up to $10 million. Penn would also provide a debtor in possession (DIP) loan of $51.5 million -- a loan that would be forgiven if the sale to Penn goes through.
"Both the DIP credit facility and the ... sale proposed by Penn National Gaming and the debtors cannot be approved over the objection of the statutory lienholders as a matter of law. Based upon the onerous and commercially unreasonable terms proposed by the prospective buyer, the (contractors) do not consent," the lien holders said in a court filing.
The contractors specifically complained about terms in the credit agreement favoring lenders over the contractors and providing for a $1.5 million breakup fee to be paid to Penn National should its deal fall apart, which they said inhibits bidding.
They said the sales motion and bid procedures "effectively preclude credit bids for everyone except (Penn)."
"First priority, statutory lienholders ... are precluded from placing a credit bid that counts as a 'qualified bid' unless they hold a judgment or order that determines their liens to be in first position as a matter of law. These bidding restrictions are unfair, will chill bidding, will preclude otherwise lawful credit bids from competing for the project and will depress the price paid for the project," the contractors' filing said. "The proposed bid procedures will guarantee that the (Penn National) bid is the winning bid, and the amount of cash that will be distributed to the first lien position, statutory lienholders will be depressed."
The contractors asked the court to hold a hearing to determine the extent of the asserted liens so they could make their own bid.
Penn National, in its bid, indicated it planned to spend $1.46 billion to finish the project -- but the company hasn't determined when construction would resume.
Once valued at $2.9 billion, some $1.675 billion has already been borrowed against the 3,815-room Fontainebleau.
Construction of the project on Las Vegas Boulevard shut down this summer after Bank of America and other big banks canceled a loan agreement because of cost overruns and other problems.
The mechanics lien claimants/contractors are 100% correct in their arguments, based on the express text of Bankruptcy Code Section 363.
The real question will be whether the Bankruptcy Courts in Miami are going to follow the law, or follow the U.S. Bankruptcy Court for the Southern District of New York and Second Circuit's opinion in the Chrysler bankruptcy case, which says, in interest, if the debtor business operation is a total dog, all of the lien claimants will be ignored and the business will be sold for what it is really worth...next to nothing. Mind you that the bankruptcy court case precedent for that position was pretty stakey, in contrast with the express text of Section 363, but when you're the Obama Administration bailing out Chrysler, you tend to get your way, the law be damned.
So, the practical question will be whether the Miami bankruptcy court judge will follow the Chrysler Opinion or the express text of the law passed by Congress.
Stay tuned.
Maybe the Treasury could put up the money and give it to the UAW?
Weasel in and screw the contractor's--NICE P.N.G--What a sweetheart deal you made to procure this beatiful property--NOT!!! As someone who lost 13 months of steady employment because Bank of America(Greed Inc.) decided to take advantage of a legally suspicious loop hole in it's contract with the developer's I'm totally against this one developer/investor deal. FontaineBleau's prowess will put the Rio, the Hilton, the Sahara and Circus Circus to shame and the investment co's that own interests in those properties is what stalled this magnificent project. Nevermind the 4,500 tradesman that did nothing but put in an honest's days work and pump cash into the local economy--I guess our input into the community wasn't enough--try and sell that to the local retailer's!!
THE FONTAINEBLEAU - property & location is a financial fiasco loser !!!
the property can not support a 1.5 to 2.9 billion dollar debt service !!!!
EVEN THE WYNN PROPERTIES - that are 2.7 to 2.2 billion dollars are currently financially challenged & they are on the prime part of the strip - with very professional management !!!
who ever takes over this white elephant will have financial night mares that might - break them financially & might break there healthy core business !!!
BE CAREFUL WHAT YOU WISH FOR - YOU JUST MIGHT GET IT !!!
the project was unprofessionally designed from the beginning in every way by very unprofessional
amateurs that did not have any experience building - LUXURY MEGA STRUCTURE HOTEL CASINOS -
CONDOS & CONDO HOTELS ARE TWO DIFFERENT ANIMALS & REQUIRE DIFFERENT CREATIVE & VISIONARY MARKETING SKILLS !!!
the original developers were way out of there leauge & the lesson to be learned from this corporate tragedy is -- YOU DO NOT SEND A BOY TO DO A MANS JOB !!!
LAS VEGAS & INVESTING BILLIONS OF DOLLARS IS NOT FOR WAN A BE - JUNIOR ACHIEVMENT BAFFOONS !!!
EVEN THE 3800 SMALL ROOMS SPEAKS VOLUMES ABOUT THERE NAIVE PERCEPTION OF TRYING TO UNDER ESTIMATE THE UPSCALE MARKET !!! & ECT ECT ECT.
ENOUGH SAID !!!
that is why no experienced successful UPSCALE hotel casino operator will bid on this TTITANIC OF A PROPERTY !!!
FOOLS RUSH IN WHERE WISE MEN NEVER GO !!!
RESPECTFULLY YOURS - BELAIR --
What is ashame is that so many workers and their families have suffered due to the shut down of Foutainbleau.The amount of debt that is owed to sub contractors should be assumed by the winning bidder of the project.
Alot of people here feel that this project will not be sucessfull and feel it will be a problem child for along time and this maybe true.
Penn National,if awarded and wins the bidshould come in with a marketing strategy bar none to all the other casinos on the strip.
Great Value with top noch service and fill its rooms with tourist.Volumn Volumn Volumn will create cash flow and help repay its debt when it opens.
What Las Vegas can not sustain is another over priced poor service Resort.They need to appeal to the Middle Class of today and treat them as the high roller of yesterday.
I will not even go to strip these days because of the attitude that I see and experience on the Strip.
I hope the new owner of Fountainbleau see's what the strip needs and decides to go after the meat and potatoe tourist and accomodate,respect,cherish the Middle class tourist.
If they do not do this Titanic is right.Maybe one day the casino execs will man up and realize the silver spoon days are over and the gouging are over.
To the Big (little minded)casino execs the Middle Class has wised up and has started looking for value.
BELAIR, you wrote:
"the project was unprofessionally designed from the beginning in every way by very unprofessional
amateurs that did not have any experience building - LUXURY MEGA STRUCTURE HOTEL CASINOS -
CONDOS & CONDO HOTELS ARE TWO DIFFERENT ANIMALS & REQUIRE DIFFERENT CREATIVE & VISIONARY MARKETING SKILLS !!!
the original developers were way out of there leauge & the lesson to be learned from this corporate tragedy is -- YOU DO NOT SEND A BOY TO DO A MANS JOB !!!"
If you'd only research the project before posting you'd know something about it's history and who conceived and planned it.
FB was the idea of Glenn Schaeffer who as Circus Circus Enterprise's point man and CFO procured the financing to build Excalibur, Luxor and Mandalay Bay. All three projects were pretty much his concepts as well. Btw Excalibur was the first mega hotel casino project to be financed using mainstream (lower yield) financial instruments. Excalibur was an OK project, at the time the largest hotel ever built. Luxor was not so good, under-built for it's market and a fundamentally flawed floorplan. Mandalay Bay brought all of Schaeffer's experience to bear and is a great property including the add-on Mandalay Bay Convention Center and TheHotel, both his concepts.
Know a few simple facts on the history of Vegas mega resort development and you wouldn't look so dumb when you post!
ATTENTION CRIBSTER 64 ----
PAST PERFORMANCE IS NOT INDICITIVE OF FUTURE SUCCESS !!!!
GLENN SCHAEFFER IS A GREAT INNOVATIVE BUSINESS MAN - BUT WHEN IT CAME TO CREATING THE LAS VEGAS FONTAINEBLEAU - I DOUBT HE WAS GIVEN A FREE REIN TO DO WHAT HE REALLY WANTED TO DO !!!
I DO NOT BLAME GLENN SCHAEFFER FOR THE FONTAINEBLEAU FIASCO !!!
if you knew any thing about the original developer & his total lack of experience in building & developing - MEGA STRUCTURE HOTEL CASINOS - YOU WOULD HAVE NEVER MADE YOUR IGNORANT COMMENTS !!!
you mean well - but you are obviosly -totally not informed about the real decision making that was done to build & develop the LAS VEGAS FONTAINEBLEAU !!!
I RESPECT GLENN SCHAEFFER & HE WOULD HAVE NEVER DESIGNED A LUXURY RESORT WITH 3800 SMALL HOTEL ROOMS TO COMPETE WITH THE WYNN - CAESARS -
VENETIAN - BELLAGIO & ECT ECT ECT.
I PERSONALLY BELIEVE THAT WHEN GLENN SCHAEFFER RESIGNED - he was very frustrated with the JUNIOR ACHIEVMENT BAFFOONS THAT HE HAD TO ANSWER TO !!!
CRIBSTER 64 - you are ignorant of the behind the scenes decision making & are very stupid & low class to call me dumb !!!
DO YOUR HOME WORK FIRST BEFORE YOU USE DIS - RESPECTFUL LANGUAGE TOWARDS ME OR ANY ONE ELSE !!!
you are a prosecuting attorneys dream ---
WRONG FACTS FACTS FACTS & HARD CORE EVIDENCE EVIDENCE EVIDENCE !!!
BELAIR TREATS PEOPLE WITH THE SAME RESPECT THEY TREAT HIM WITH !!!
RESPECTFULLY YOURS - BELAIR --
ATTENTION CRIBSTER 64 ---
BELAIR INVITES EVERYONE TO CLICK ON TO
CRIBSTER 64 IN THE UPPER RIGHT HAND CORNER OF
HIS COMMENTS !!!
THAT WILL PULL UP HIS ENTIRE HISTORY OF MAKING IGNORANT STATMENTS !!
HE OBVIOUSLY KNOWS THE ORIGINAL DEVELOPER - THE SOFFER FAMILY & CONTINUED TO DEFEND THEM MANY MONTHS AGO !!! - HIS CURRENT COMMENTS ARE QUITE CIRCUMSPECT & HE STATED IN ONE OF HIS COMMENTS MONTHS AGO - THAT HE WAS SURE THE SOFFER FAMILY WILL GET THE FINANCING TO COMPLETE THE LAS VEGAS FONTAINEBLEAU PROJECT !!!
BELAIR DID HIS HOME WORK & RESEARCH ON
CRIBSTER 64 & CONCLUDED HE IS JUST AN IGNORANT SCHILL FOR HIS BAFFOON FRIENDS THE SOFFER FAMILY
-- READ HIS PAST COMMENTS & DRAW YOUR OWN CONCLUSIONS - CRIBSTER 64 THINKS EVERY ONE WAS BORN YESTERDAY & UNDER ESTIMATES PEOPLE JUST LIKE HIS BAFFOON FRIENDS - WHO UNDERESTIMATED THE UPSCALE MARKET - WHEN THEY PLANNED & DESIGNED THE LAS VEGAS FONTAINEBLEAU !!!
THAT IS WHY NO BANK CURRENTLY WILL GIVE THEM ANOTHER DOLLAR - ENOUGH SAID !!!!
RESPECTFULLY YOURS - BELAIR --
I ENCOURAGE YOU TO REPLY SO THE WHOLE WORLD CAN
SEE WHAT AN IGNORANT - SCHILL OF A BAFFOON YOU ARE !!!
Fountain-Dog
BELAIR, I didn't call you dumb, I called your post dumb. Go back and read your original post! I stick to what I said in my post!
Your content...it's not good. Are you always so irrational using silly hyperbole, like all in uppercase. Begin by taking a lesson in composition!
P.S. BELAIR:
You are an atrocious read, just atrocious! Lol though.
Btw, I am but a lowly casino industry worker (but at least I can write a halfway readable paragraph...lol!).
No, I don't know the Soffers. Really.
Belair please buy a keyboard with a working caps lock key. Your posts were in all caps and as a result I completely ignored and bypassed them.
Ty johnny.
I have personal knowledge about the Soffer family and the original FB having grown up in South Florida. I worked at Turnberry Isle, a resort built by the Soffers and a place where several family members lived at the time. They were not very friendly people. As for the original FB, it was built in the 1950's in Miami Beach and at that time it was considered the "most luxurious" resort in the area. Over time it became old and dated, but it was recently restored and I heard it's quite nice once again. Most visitors to LV will never have heard of it, so they won't know what to expect. I agree that the new owner should make the new FB a place for the middle class to feel pampered and appreciated. Since it's location is far from the "action", they need to do something special to attract new customers. They need a marketing guru like Bob Stupak to get people to come and check out the place, have a good time, win a few dollars then go home and tell their friends about it.