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July 31, 2014

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Hard Rock foreclosure sale rescheduled

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Steve Marcus

A view of the Hard Rock hotel-casino at Paradise Road and Harmon Avenue on Tuesday, Jan. 25, 2011.

Hard Rock Casino

A view of the Hard Rock hotel-casino at Paradise Road and Harmon Avenue on Tuesday, Jan. 25, 2011. Launch slideshow »

Map of Hard Rock Hotel & Casino

Hard Rock Hotel & Casino

4455 Paradise Road, Las Vegas

The proposed foreclosure sale of the Hard Rock hotel-casino in Las Vegas has been rescheduled from Monday to Tuesday — assuming a New York state judge in Manhattan allows the foreclosure to proceed.

Attorneys are waiting for Bernard Fried, a New York State Supreme Court justice, to rule on the Las Vegas Hard Rock's motion that the foreclosure be blocked. In New York, the Supreme Court is a trial court similar to Clark County District Court in Las Vegas. The highest court in New York is the state Court of Appeals.

If Fried allows the foreclosure to proceed, it's now set for 4 p.m. Tuesday, New York time, on the New York City courthouse steps.

That timing would probably accommodate the State Gaming Control Board and the Nevada Gaming Commission on Tuesday morning in Carson City potentially approving Navegante Gaming LLC as the contract casino operator for the foreclosing lender, NorthStar Realty Finance Corp. of New York.

The timing is important, because only one party at a time can be licensed as the casino operator and that's the party designated by the owner and approved by regulators.

In this case, NorthStar, owed $96.2 million, is trying to foreclose on ownership interests in the parent companies of the Hard Rock. The foreclosure notice says the foreclosure is "subject to'' a mortgage and senior loan with more than $1 billion due.

NorthStar, in defending against the lawsuit, said that if it forecloses the senior lenders will then be able to foreclose on their interests including the Hard Rock real estate.

NorthStar also disputed suggestions that it would put the hotel-casino into bankruptcy if it gained organizational control of the Paradise Road property after a foreclosure.

"If NorthStar forecloses and obtains that organizational control, there are a number of ways in which NorthStar might seek to maximize the recovery on its investment,'' NorthStar's attorneys said in a court filing. "While a Chapter 11 reorganization is a possibility, it certainly is not the ineluctable result.''

Officials at the Hard Rock, its manager and minority equity partner Morgans Hotel Group and NorthStar haven't commented on the situation other than in a regulatory filing in which the Hard Rock said it was fighting the foreclosure.

The lenders senior to NorthStar, in the meantime, say the rescheduling of the foreclosure is one more reason that Fried should block it. They say the newly-scheduled date doesn't comply with notice requirements. Court records indicate NorthStar has not yet replied to that complaint.

Attorneys with the law firm Latham & Watkins, counsel for the senior lenders Brookfield Financial LLC and Vegas HR Private Ltd., said in a letter to Fried on Friday: "This kind of helter skelter last-minute maneuvering is particularly inappropriate here where the proposed `amendment' is designed solely for the benefit of only one potential bidder: NorthStar.''

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  1. Very interesting. The real story here is that the HRH is in BIG Trouble!...unfortunately.