Loan approved for Las Vegas Mob Experience

The bankrupt Las Vegas Mob Experience attraction at the Tropicana resort received interim approval Monday for a loan to fund operating losses and to keep the business open until it’s sold.

Bankruptcy Judge Bruce Markell approved the plan in which an existing Experience investor, John Vipulis, has agreed to loan the attraction $375,000 on a short-term basis.

He also plans to buy The Experience for about $2 million under a fast-track plan in which it could be out of bankruptcy in early January, just three months after it filed for Chapter 11 reorganization and protection on Oct. 17.

Creditors Vion Operations Inc. and Strategic Funding Source, which say they’re owed $4 million under a receivables factoring deal in which they’re supposed to receive a portion of Experience revenue, had questioned the loan plan and whether The Experience had tried to find financing on more favorable terms.

Those creditors are upset because the sales plan on the table would result in them being paid just $50,000 for their $4 million claim.

But during a hearing before Markell on Monday, attorneys for The Experience said that without the loan from Vipulis, there would be no revenue for any creditor to stake a claim to as The Experience wouldn’t be able to operate.

A budget filed in the bankruptcy case estimates revenue at The Experience will range from about $10,000 per week to as high as $26,000 per week during the upcoming holidays.

With expenses topping $35,000 most weeks, that will lead to a cash deficit of about $358,000 by Jan. 30, the budget says.

"This entity is going to be ... insolvent. It’s in default on its lease with the Tropicana. It hasn’t paid the rent due for several months. It has allowed mechanics (contractors) liens in excess of $4 million to be recorded against the Tropicana,'' said attorney Gerald Gordon, of the Las Vegas law firm Gordon Silver, representing Murder Inc., parent company of The Experience. "The bottom line is the debtor has no ability to make rental payments. It has no ability to survive.’’

The Experience has not yet filed detailed financial information, but in its initial bankruptcy filing its assets were reported as being worth under $500,000 while its liabilities top $10 million.

The Experience has been hurt by disappointing visitor counts as well as infighting among its investors. The interactive portion of The Experience was shut down last month when its audio visual gear was repossessed, leaving just the museum portion open. In all, only about 11,000 square feet of the 26,000-square-foot attraction are open.

Markell approved the Vipulis loan after an attorney for Vion and Strategic said those companies weren’t in a position to take over operation of the business.

Vion and Strategic will have another chance to strengthen their positions as creditors during a final hearing on the loan set for Nov. 7.

Markell said information presented by The Experience backed up its contention that it was unable to find more favorable funding elsewhere.

Louis Ventre, manager of The Experience, said in a court declaration Monday that Vion and Strategic had failed to mention in their objection to the Vipulis loan that they or Vion’s parent company had their own discussions with the Tropicana about providing additional funding to The Experience.

"Based on the terms and conditions that Vion and Strategic demanded from the Tropicana and the mechanics’ lienholders in order to provide such financing, the parties were never close to an agreement,’’ Ventre said in his declaration.

And earlier this month, The Experience received a financing proposal from Select Contracts Canada Inc. of Whistler, British Columbia – a plan with "numerous substantial problems,’’ Ventre said.

"Select Contracts proposed to raise additional financing for the Las Vegas Mob Experience by trying to have the Tropicana impose a resort fee on all of its guests, which was a non-starter from the Tropicana’s perspective,’’ he said.

The Experience also had talks with Ripley’s Entertainment, operator of attractions using the ``Believe It Or Not’’ theme.

Nothing panned out though, as Ripley’s indicated it would need time to conduct a substantial amount of due diligence and ``such a high-caliber operator would generally require a more stabilized attraction prior to financing,’’ Ventre said

Markell on Monday also approved an agreement with the Tropicana in which it is making concessions to The Experience, as well as routine ``first day’’ motions allowing The Experience to continue paying wages and taxes.

The cooperation of the Tropicana is crucial to any future success of The Experience as the casino resort could have evicted The Experience for nonpayment of rent and for allowing liens to pile up against its real estate, but has chosen not to.

Records show The Experience was supposed to pay 10 percent of gross sales in rent, or a minimum of $83,000 per month. It hasn’t paid rent since May, Murder Inc. said in bankruptcy court papers.

If The Experience emerges from bankruptcy under the Vipulis purchase plan, the Tropicana has agreed to a new lease with him calling for payment of rent equaling 10 percent to 20 percent of gross sales – with some of the payments deferred until Vipulis recovers his investment of $3.75 million and general contractor M.J. Dean Construction has recovered its investment of about $2.5 million.