Third time in three decades; will continue to operate during the restructuring

Riviera Holdings Corp., parent company of the Riviera Hotel Casino on the Las Vegas Strip, has filed for protection from its creditors under federal bankruptcy laws for the third time in three decades.

The pre-negotiated Chapter 11 filing was made with the support of a majority of the debt-holders.

Also filing were the Strip casino’s operating company and Riviera Black Hawk, operator of Riviera Black Hawk Casino in Black Hawk, Colo.

The casinos will continue to operate during the restructuring and will continue to pay employees and vendors and honor customer deposits. The company has 1,300 employees in Las Vegas and 260 in Colorado.

“When we come out [of bankruptcy] the company will be a lot stronger and ready to turn a new page,” Riviera Holdings general counsel Tullio Marchionne told the Las Vegas Review-Journal.

Marchionne said Riviera Holdings has $270 million in total debt, which will be reduced to $50 million. Some lenders may be willing to provide an additional $30 million in loans, he said.

Riviera Holdings lost $4.5 million in the first quarter, but its operating loss totaled $629,000.

The filing marks the third time the 55-year-old Strip casino has filed for bankruptcy protection, most recently emerging from Chapter 11 in 1993.

Meshulam Riklis, a Turkish-born corporate raider, bought the Riviera in 1973 and twice filed for bankruptcy. Riklis lost his ownership interests in the Riviera in the second bankruptcy case.

Riviera Holdings Chairman William Westerman took the company public with shares trading for a time on the American Stock Exchange. He oversaw the expansion of Riviera on the Strip to 150,000 square feet in 1997 and construction of the Black Hawk casino in 2000. He died in April at 78.

The Riviera group is the third major casino operation to seek bankruptcy shelter during the current recession. Herbst Gaming was first, followed by Station Casinos.