VEGAS INC Coverage
As the 2009 Station Casinos Inc. bankruptcy case in Nevada heads towards a conclusion, numerous of its subsidiaries and joint ventures filed prepackaged Chapter 11 bankruptcy reorganization petitions on Tuesday as expected.
Station has said the filings by the subsidiaries are needed to complete the overall restructuring in which lenders and members of Station's founding Fertitta family are acquiring most of the properties out of the bankruptcy.
Besides putting the subsidiaries into bankruptcy, the company moved for joint administration of the cases with the main Station case in bankruptcy court in Reno.
Station also asked for court orders routinely granted such as allowing the subsidiaries to continue paying vendors and employees as usual -- as well as continued payment of gaming liabilities such as casino chips and winnings on sports bets; and the honoring of comps earned by customers with Station Boarding Pass cards.
Two properties co-owned by affiliates of the Greenspun family, owner of the Las Vegas Sun, were among those filing for Chapter 11 on Tuesday.
Green Valley Ranch Resort in Henderson is being purchased by an affiliate of the Fertittas out of the bankruptcy for $500 million, while Aliante Station in North Las Vegas is being spun off to lenders and will be managed by a Fertitta company.
Records show that in the Green Valley Ranch hotel-casino case, the Fertitta entity has agreed to pay the Greenspuns' gaming company .3 percent of monthly gross revenue from the property in exchange for using the Green Valley Ranch trademark under a 20-year exclusive license in connection with the hotel.
While the Fertittas dispute the validity of the trademark, the licensing deal avoids potentially costly litigation like that between investor Carl Icahn's Tropicana Entertainment Inc. and the Tropicana Las Vegas hotel-casino.
Besides settling the trademark issue, the Greenspuns have an option for an equity stake in Green Valley Ranch Resort.
In the Green Valley Ranch case, former state gaming regulator and Nevada Resort Association chief Bill Bible and Station Casinos board member Dr. James Nave headed a Green Valley Ranch "Transaction Committee."
The committee, advised by attorneys and financial advisers, oversaw the auction process of Green Valley Ranch since the existing owners of the property were potential bidders.
Bible also headed an "Investigation Committee," which conducted an independent investigation of the 2010 allegations by the Greenspuns' company of mismanagement of Green Valley Ranch -- allegations that were later dropped when the parties resolved their differences.
Bible's committee also looked into distributions from the hotel-casino to its owners of $285 million apiece in 2007 and a 2008 note forgiveness arrangement.
His "Investigation Committee collected and reviewed nearly 30,000 documents, interviewed 25 witnesses and researched and analyzed applicable law," a court filing said, with the conclusions in February being that "the 2007 Distributions, the 2008 Note Forgiveness and the allegations regarding the management of Green Valley Ranch did not give rise to actionable claims."
These types of investigations are typically conducted by companies in bankruptcy to determine if the company could face litigation from creditors over past financial transactions.
Bible's panel found the financial projections in connection with the 2007 distribution and the 2008 note forgiveness were reasonable at the time they were made and Green Valley Ranch was not insolvent at the time of the 2007 distributions or 2008 note forgiveness and did not become insolvent as a result of those arrangements.
"The Investigation Committee made the following findings regarding the allegations (of mismanagement): there is no credible evidence that (Station's management company) attempted to systematically divert high-end table play from Green Valley Ranch and ... there is no evidence that Green Valley Ranch implemented a companywide marketing program with the intent to harm Green Valley Ranch and the evidence does not support allegations that Green Valley Ranch directed lower-quality meat to Green Valley Ranch in order to divert business from Green Valley Ranch," a Station court filing said.
In the Aliante Station case, Bible and Nave also headed a committee that oversaw the marketing of that property, records show.
Hit hard by the recession and unable to meet debt obligations, Station filed for bankruptcy in July 2009.
With unemployment at record levels in its main Las Vegas-area market, where it has 18 properties, the company lost $176.5 million on lower revenue in the fourth quarter.
Subsidiaries and ventures filing for Chapter 11 on Tuesday:
Auburn Development, LLC; Boulder Station, Inc.; Centerline Holdings, LLC; Charleston Station, LLC; CV HoldCo, LLC; Durango Station, Inc.; Fiesta Station, Inc.; Fresno Land Acquisitions, LLC; Gold Rush Station, LLC; Green Valley Station, Inc.; Inspirada Station, LLC; Lake Mead Station, Inc.; LML Station, LLC; Magic Star Station, LLC; Palace Station Hotel & Casinos, Inc.; Past Enterprises, Inc.; Rancho Station, LLC; Santa Fe Station, Inc.; SC Durango Development, LLC; Sonoma Land Holdings, LLC; Station Holdings, Inc.; STN Aviation, Inc.; Sunset Station, Inc.; Texas Station, LLC; Town Center Station, LLC; Tropicana Acquisitions, LLC; Vista Holdings, LLC; Aliante Station, LLC; Aliante Holding, LLC; Aliante Gaming, LLC; Green Valley Ranch Gaming, LLC.