Unsecured creditors challenge Station Casinos’ plan to keep Green Valley Ranch
Station Casinos’ efforts to keep Green Valley Ranch Resort part of the Las Vegas locals gaming company have been challenged after attorneys representing unsecured creditors asked a federal bankruptcy judge to delay a decision on the sale of the hotel-casino.
Station Casinos LLC, the company formed to buy most of the assets of bankrupt Station Casinos Inc., in March announced a deal with lenders to buy Green Valley Ranch Resort for $500 million.
Attorneys for the committee of unsecured creditors — MFS Investment Management, Panton Capital Group and Babson Capital Management LLC — filed the motion Monday in U.S. Bankruptcy Court in Reno, accusing the buyers, led by the Fertitta family, of being on both sides during the negotiations.
The unsecured creditors are asking federal bankruptcy Judge Gregg Zive in Reno to delay a May 25 hearing to approve the sale as part of the voluntary prepackaged bankruptcy filing for Station Casinos.
Station Casinos spokeswoman Lori Nelson on Wednesday declined to comment on the allegations.
In the 39-page motion, attorneys allege “preliminary diligence of the plan has uncovered numerous red flags,” including “concerns of insider dealing.”
Attorneys also alleged the sale of substantially all the assets to an entity controlled by Station Casino was “dictated by insiders … and unsecured creditors (other than those favored by the insiders) are to receive nothing on account of their claims.”
The unsecured creditors claim the $500 million sale price for Green Valley Ranch is low, and undercut by “historical cash flows potentially depressed by the wrongful acts of insiders.” They also questioned whether cash flow projections made by the company “may significantly understate Green Valley Ranch’s earning capacity.”
In court filings last year, Station Casinos warned that Green Valley Ranch Resort could default on more than
$750 million in secured debt as the recession reduced revenue and cash flow at the hotel-casino. Green Valley Ranch Resort was not part of Station Casinos’ 2009 bankruptcy.
In 2010, GV Ranch Station Inc., a subsidiary of Station Casinos, did file for bankruptcy protection. Station Casinos LLC, the company created by the original bankruptcy filing, is controlled by parties including Deutsche Bank AG and JP Morgan Chase and investors led by the Fertitta family, Frank Fertitta III and his brother, Lorenzo Fertitta.
Station Casinos filed for bankruptcy after it was unable to cover $5.9 billion in debt obligations. Zive signed off on the company’s reorganization plan in August after 90 percent of the company’s secured and unsecured creditors agreed to the restructuring plan.
Messages left with attorneys listed on the motion, with Brown Rudnick LLP in New York and Downey Brand LLP in Reno, were not returned.
The motion didn’t identify the three unsecured creditors seeking the delay as among those who originally approved the Station Casinos’ reorganization plan. The company was expected to emerge from bankruptcy soon with a more manageable debt of $2 billion.
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
