Herbst Gaming is privately held by the Herbst brothers, Ed, Timand Troy, but roughly three-quarters of its debt is provided bypublicly traded bonds. The company operates 16 casinos (some withhotels) and 7,200 slot machines in Nevada.

In this and previous filings, the company has said its SouthernNevada operations are being negatively affected by the subprimemortgage crisis and a statewide ban on smoking in taverns andrestaurants. Herbst's overall revenues grew 43% to $849.2 millionin 2007, thanks to the acquisition of two major casino companies,but a 20% loss in revenue from its slot route business coupled withthe increased debt load from the acquisitions resulted in a netloss of $127.2 million, according to SEC filings.

The specific mention of a bankruptcy filing follows thecompany's decision last month to engageGoldman, Sachs & Co. as financial advisor to evaluate financialand strategic alternatives, including recapitalization,reorganization and sale. Prior to that an independent audit of thecompany's finances by Deloitte & Touche came with a "goingconcern" qualification, which is a default under its creditagreement with its bond holders.