B.B. King’s, Mirage still fighting over lease terms
11 October 2011
Casino operator MGM Resorts International showed lots of love for Eva Longoria’s bankrupt Beso restaurant – but it’s showing little patience with the similarly-bankrupt B.B. King’s Blues Club at the Mirage.
The B.B. King’s business at the Strip resort filed for Chapter 11 bankruptcy reorganization in February and later sued the Mirage in bankruptcy court over a lease dispute, charging the casino was overcharging it for dishwashing and restaurant and kitchen cleanup services. The Mirage has denied those allegations.
As B.B. King’s tries to emerge from bankruptcy, its attorneys last month filed a motion asking that the court approve its continued participation in its lease with the Mirage – subject to the lease being amended so it doesn’t have to pay what it calls the excessive stewarding, or cleaning, charges.
"The debtor’s continued occupancy of the property governed by the lease has resulted in a profit for the debtor, which profit debtor proposes will fund a plan of reorganization," said the filing by B.B. King attorneys with the Las Vegas law firm Santoro, Driggs, Walch, Kearney, Holley & Thompson.
Despite this claim of profitability, B.B. King’s Las Vegas said in its August financial report it has been running at a breakeven pace since filing for bankruptcy, losing about $1,000 since that time on revenue of $5.198 million.
Attorneys for the Mirage filed briefs last week opposing B.B. King's plan to continue operating under the disputed lease, saying there is no lease for B.B. King’s to continue operating under as the Mirage had served the business with eviction papers just before the bankruptcy.
They also said B.B. King’s owed the Mirage about $635,000 prior to the bankruptcy, including nearly $150,000 that had nothing to do with the disputed stewarding charges.
Yet, B.B. King’s has failed to cure this alleged default or provide assurances of a cure, which is a requirement if it wants to continue operating under the lease, Mirage attorneys said in one of their briefs.
"There is no lease for the debtor to assume and the motion is an exercise in futility," the Mirage’s filing said. "The debtor is not profitable. To continue in this vein is not a responsible exercise of the debtor’s business judgment, and though the debtor’s principal may be willing to commit the debtor to such continuing losses, it is certainly not in the best interests of the (bankruptcy) estate."
Attorney Nile Leatham of the local law firm Kolesar & Leatham, representing the Mirage, added in his filing that if the court allows the restaurant to continue operating under the lease, B.B. King’s should be required to put the $635,000 in past-due payments into escrow until the bankruptcy court lawsuit over the lease is resolved.
Bankruptcy Judge Mike Nakagawa plans hearings this month and next month on the disputed lease as well as the underlying bankruptcy court lawsuit between B.B. King’s and the Mirage.
With Leatham representing MGM Resorts’ Crystals shopping center at CityCenter, it was Nakagawa who on Oct. 3 approved a plan by Landry’s Restaurants Inc. to buy the assets of Longoria's Beso restaurant at Crystals.
That was a deal supported by Crystals in which it’s facing a steep loss from Beso’s unpaid rent -- but believes Longoria’s star power will help revive Beso and boost the fortunes of the high-end shopping center.
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