Bankruptcy judge gives contractors 10 days to come up with more than $200 million
The judge presiding over the Fontainebleau Las Vegas bankruptcy judge has given contractors 10 days to come up with more than $200 million if they want to continue their bid to buy the shuttered, half-finished Strip resort.
In U.S. Bankruptcy Court in Miami, Judge A. Jay Cristol said the contractors could appeal rulings against credit bidding if they come up with a bond of $156 million and another $51 million in cash, according to a report in the Las Vegas Sun.
The bond would cover value potentially lost by the Fontainebleau estate should the contractors’ appeal interfere with the sale of the resort. The $51 million would replace the amount of money that financier Carl Icahn has agreed to loan Fontainebleau as part of his $156.2 million stalking horse bid. His bid is the most offered for the project as the recession and problems with the development have wiped out its value.
Cristol rejected a motion by the contractors that they be allowed to make a credit bid, noting uncertainty about which contractors’ and lenders’ liens are in first position, second position and further down the chain.
Last week, lenders owed $1.04 billion sued hundreds of contractors charging their liens are inferior to the liens of Bank of America and other lenders. The contractors claim to be owed some $467 million. Banks and bondholders are owed some $1.67 billion.
Cristol said those disputes can be sorted out later, after the resort is sold at auction next month, and it can be decided later if the disputes will be decided in Miami, where Fontainebleau’s development company is based, in New York, where banks are based, or in Las Vegas.
“We [first] need to get this project sold and get a pot of money [to distribute to creditors],” the judge said.
Contractors still in running for Fontainebleau
December 9, 2009