VEGAS INC coverage
The Hooters hotel-casino in Las Vegas says it’s making progress in attracting investors, but that it also needs more time to resolve its bankruptcy case.
In a filing in U.S. Bankruptcy Court for Nevada on Friday, Hooters asked that its exclusive 120-day period to propose a bankruptcy reorganization plan be extended 60 days, from Nov. 29 to Jan. 28.
Hooters’ key creditor, Canpartners Realty Holding Company IV, has argued the reorganization efforts are a waste of time and money since Hooters is so far underwater on its mortgage that it’s inevitable Canpartners will succeed with foreclosure efforts.
Hooters’ current investors, however, say their business is worth saving and they’re searching for investors to help revive the property.
By having an exclusive period in which it can propose a reorganization plan, Hooters can maintain control of the bankruptcy case during that time by focusing on its own plan rather than any competing plans that may be offered.
The 696-room property on Tropicana Avenue, just east of the Las Vegas Strip, filed for Chapter 11 bankruptcy reorganization and protection on Aug. 1 to block a foreclosure threatened by Canpartners, holder of $178 million of Hooters’ $181 million face value in debt.
On Oct. 5, Bankruptcy Judge Bruce Markell in Las Vegas approved plans by Hooters to hire Innovation Capital LLC of El Segundo, Calif., to market the property to debt and/or equity investors.
In Friday’s court filing, Hooters said the plan is to either obtain a significant capital investment for a major remodeling and renovation of the hotel-casino or a smaller capital infusion to finance a rebranding of the property along with a limited remodeling.
Hooters’ filing didn’t say why it’s considering a rebranding initiative, but Canpartners has charged that the Hooters casino brand has failed in Las Vegas.
Hooters attorneys said in their filing Friday that because of legal skirmishes with Canpartners early in its bankruptcy case, its efforts to attract capital were delayed, but that they’re now proceeding as planned.
Since it was hired, Innovation sent teasers and confidentiality agreements to more than 200 potential investors, Hooters said.
These include financial investors, such as hedge funds and private equity investors, as well as strategic investors, such as gaming operators and hospitality companies interested in gaming or the Las Vegas market.
As of Wednesday, 22 potential investors had signed the confidentiality agreements and received the confidential investor presentation, Hooters said.
Hooters said in its filing that it’s making progress in its bankruptcy case despite “Canpartners’ injurious efforts at sabotaging these cases before they even gained momentum.”
While exclusivity period extensions are routinely requested and granted, they’re also sometimes contested.
If there is opposition to the request from Canpartners or another party, it will be heard by Markell during a hearing set for Nov. 29.