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StumbleStation Casinos bondholders seek delay in auction process
Wednesday, June 9, 2010 | 10 a.m.
Sun Archives
- Judge OKs Station Casinos’ plan to sell 11 casinos (5-28-2010)
- Judge deals blow to Culinary Union effort in Station Casinos bankruptcy case (5-27-2010)
- New objections filed to Station Casinos bankruptcy plan (5-25-2010)
- Station Casinos loses $53.5 million in first quarter (5-17-2010)
- Station Casinos: No competitive advantage under bankruptcy plan (4-29-2010)
- Station Casinos: Boyd Gaming meddling in bankruptcy case (4-28-2010)
- Boyd Gaming objects to Station Casinos reorganization plan (4-22-2010)
- Union-backed group critical of Station reorganization plan (4-21-2010)
- Creditors attack Station Casinos bankruptcy plan (4-21-2010)
- Key lenders agree to Station Casinos reorganization plan (4-19-2010)
- Station Casinos asks judge for extension in bankruptcy case (4-8-2010)
Bondholders standing to lose $2.5 billion in the Station Casinos Inc. bankruptcy case moved Tuesday to delay the Las Vegas company's auction process while they appeal a court ruling approving the bidding plan.
Bankruptcy Judge Gregg Zive in Reno on May 28 approved a plan in which 11 of the company's properties would be auctioned on Aug. 6, with Station's founding Fertitta family and certain lenders being the “stalking horse bidder” with a bid of $772 million.
Under the company's complex reorganization plan, five casinos wouldn't be auctioned. Four of those are being foreclosed on by lenders owed $2.475 billion for those four properties. The Fertittas and Station co-owner Colony Capital have struck a deal to manage and co-own those properties: Red Rock Resort, Sunset Station, Boulder Station, Palace Station and the Wild Wild West.
The 11 properties to be auctioned include Texas Station, the Santa Fe and the two Fiestas.
Two additional properties, Green Valley Ranch Resort in Henderson and Aliante Station in North Las Vegas, aren't in bankruptcy and won't be included in the auction. The Greenspun family, owner of the Las Vegas Sun, is Station's partner in those properties and the partners are working to restructure the debt against those hotel-casinos.
Station, like other hotel-casino operators, was hit hard by the recession and the company filed for bankruptcy last July after it was unable to meet debt obligations.
The bondholders, represented by the case's Official Committee of Unsecured Creditors, have argued the bondholders aren't being treated fairly in the proposed auction because the bidding procedures were drawn up to benefit the Fertittas.
On Tuesday, they filed their appeal of Zive's approval of the bidding procedures and said they elected to have the appeal heard in U.S. District Court for Nevada, rather than through the bankruptcy appellate process.
They also filed an emergency motion to stay proceedings in the case pending resolution of the appeal and said delaying action in the case won't hurt Station.
“In sharp contrast to the harm that Station Casinos Inc.’s creditors will suffer if the sale proceedings are not stayed pending its appeal in this case, neither Station Casinos nor any other interested party will be injured if a stay is granted. Indeed, while the appeal is pending, Station Casinos will continue to operate, pay its operating expenses and generate revenues,” the bondholders said in their filing.
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It will be interesting to see how a judge, other that Gregg Zive, makes ruling on a case that has favored the debtors over the creditors every step of the way.
We all know how the cash grab works, and this case wreaks of corruption at ALL levels..
The FBI should take a hard look at why Gregg Zive ruled this way on this case, and the opposite on one very simular. The Fertitta's should not be allowed to bid on anything.
Let's all bid on the Stations casinos. We can't do as bad as the FERTITAS! I would have looser slots,1m Progressive Video Poker, full pay blackjack, bigger jackpots for bingo, and a better BUFFET!!
Bondholders are pathetic here...they should wind up owning the company and the Fertittas should be out on their ass.
Who the hell is representing them?
chazbean;
Would the buffet be free to nickel slot players? That clearly is the only means to operate a successful casino in Vegas! (please see my sarcasm and agreement with your post)
I don't see as how the unsecured creditors have a case on the propco casinos. Although a bit curious, Deutche Bank has the right to "foreclose" as the secured lender on that debt, and they should be allowed to restructure as they see fit.
As for the opco casinos - here is where I'm very confused. Why is Greg Zive seemingly cowtowing to every request that the Fertittas have suggested? Why is this package of properties being sold only as a bulk unit?
With prospective operators such as Isle of Capri, Silver State, Carl Ichan, Penn National, Boyd Gaming, etc. possibly interested into entering or furthering their interests in the Las Vegas market, it seems shady that these properties aren't being piece mailed to possibly garner more value for the indebted.
As has been reported, these unsecured debtors are furious at what they perceive as complete and utter injustice in the rulings of Judge Zive. From a layman's perspective - I can understand how they feel as such.
Fertitta Gaming stands, as the stalking horse, to regain these properties at far below the market value. Kudos to them if they can make it happen, but I still think that Boyd is going to step up and prepare an offer that forces Fertitta Gaming's hand.
At the end of the day, I have no particular love for anyone who buys junk bonds and becomes unsecured in the lending process. There is inherent risk, so you take your lumps when you lose, you gain lots of money when you win. It's the nature of the volatility of the market. That said, these unsecured lenders have really taken a shot to the chin in these bankruptcy court proceedings.
It will be interesting to see how this plays out.