Log In | Register
MIAMI — Casino-resort developer Fontainebleau Las Vegas LLC said Tuesday it has filed for Chapter 11 bankruptcy protection after failing to get certain lenders to provide about $800 million in construction funding to complete the company's $2.9 billion property on the Las Vegas Strip.
Fontainebleau Las Vegas had filed a $3 billion lawsuit in April against Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas and eight other lenders in an effort to access the prearranged financing to pay its 3,000 construction workers and finish the project, which is 70 percent complete and had eyed an October opening.
The complaint alleged that the lenders terminated their agreement to provide an $800 million revolver loan due to one or more unspecified "events of default" by Fontainebleau. But the developers said they didn't default on any part of their agreement. Bank of America spokeswoman Shirley Norton told The Associated Press in April that the bank was discussing "restructured financing" with the company.
The lawsuit was amended last month to charge that one of the lenders, Deutsche Bank, purposely interfered with contracts because the bank owns a rival resort also being built on the Strip, which is projected to open in 2010. The company is demanding additional damages from the bank.
"It is unfortunate that our lenders forced us to take this step. By reneging on the revolving credit facility, they effectively shut down the project and put thousands of people out of work," said Howard Karawan, chief restructuring officer of Fontainebleau Las Vegas. "Our goal now is to secure funding to complete this world-class project and restructure our existing debt."
Fontainebleau Las Vegas said its other lenders have agreed to let the company use cash during its bankruptcy case, and the company is in talks to obtain financing to restart construction at the 3,900-room resort. The Chapter 11 filing includes affiliates Fontainebleau Las Vegas Holdings LLC and Fontainebleau Las Vegas Capital Corp.
Details of the company's total assets and liabilities weren't immediately available.
The company said its Fontainebleau Miami Beach property is not included in or affected by the filing and continues to operate as normal. Turnberry West Construction Inc., the project's general contractor, also is not included in the filing.
Fontainebleau has withdrawn its Las Vegas lawsuit against the lenders and refiled the case in U.S. Bankruptcy Court in the Southern District of Florida, Miami, where its Chapter 11 petition was filed.
"Fontainebleau Las Vegas will continue to aggressively prosecute claims against these lenders for failing to honor their contractual commitments," said Scott Baena of Bilzin Sumberg, bankruptcy counsel to the company.
The other institutions named in the lawsuit are Merrill Lynch Capital Corp., Barclays Bank PLC, Royal Bank of Scotland PLC, Sumitomo Mitsui Banking Corporation New York, Bank of Scotland, HSH Nordbank AG, Camulos Master Fund LP and MB Financial Bank NA.
