Station Casinos gets extension on sole right to draft bankruptcy plan

By Cy Ryan

Tuesday, May 4, 2010 | 7:58 p.m.

CARSON CITY — Station Casinos is getting a little extra time as the exclusive company or group to draw up a reorganization plan in its $6.6 billion bankruptcy case.

U.S. Bankruptcy Court Judge Gregg Zive gave the Las Vegas casino company until mid July to exclusively put forth a plan on how to emerge from its debt.

His approval came after creditors and independent lenders withdrew opposition to an extension. Attorneys for the groups initially wanted the exclusive right to draft a plan to end May 24 so they and others could prepare their own bankruptcy plan.

Zive had been leaning toward giving Stations the extension, saying, “I’m not sure why we should open the door to that type of distraction,” referring to others who might submit rival plans.

Boy Gaming Corp., which has expressed interest in purchasing casinos held by Station, earlier withdrew its opposition to extending the exclusive right given Station Casinos.

Deutsche Bank and JP Morgan hold a $2.475 billion mortgage on four of Station’s most valuable properties: Red Rock Resort, Sunset Station, Boulder Station and Palace Station. They and Station Executives Frank and Lorenzo Fertitta would take over those four casinos.

Another 13 casinos would be put up at an auction.

The Fertittas and the banks have put together a proposal to bid $772 million for those 13 casinos. But other companies could outbid them.

The judge also allowed the lenders and creditors additional time to take depositions from two more officials. Zive will hear additional arguments Wednesday on the bidding procedures but said he won’t rule until later hearings set for May 26-27 in Reno.

Lawyers for Station Casinos objected to allowing more depositions. Thomas Kreller, attorney for Station Casinos, said it gave the bondholders, creditors and lenders 50 reports and allowed them to take depositions from five officials.

But lawyers for the creditors and others told Zive they have not been able to get all the necessary information to assess the proposed reorganization plan. They argued that they need to know how the “stalking horse” plan was selected and want to know the value of such things as customer lists and land.

“There is no evidence on the value of the excluded assets,” said Eric Winston, attorney for the creditors’ community.

They also questioned an issue involving Texas Station.

The land beneath the casino is owned by members of the Fertitta family. If a bidder other than the Fertitta-bank combination wins the auction, it would face a bill of $75 million to $125 million, the judge said. He said that could be a “chilling factor on any bid” and might spark years of litigation.

The judge also granted an uncontested motion by Station Casinos to extend the deadline from May 24 to Nov. 24 for the company to make a decision on whether to extend the lease on its corporate headquarters at 1501 Pavilion Drive.

The judge said it makes sense to extend the lease because “the headquarters’ lease is part of the overall circumstances.”