Canpartners successfully had a court-appointed receiver take control of the property in March after other alleged creditors jumped in and forced the borrower, which had defaulted on a $56-million loan, into Ch. 11 bankruptcy in April, thereby preventing an earlier attempt by Canpartners to sell the property. Judge Peter J. Walsh approved the sale in July by granting Canpartners' motion for relief from the automatic stay caused by the forced bankruptcy filing. Walsh noted in his order that no objections to the motion or the waiver of the 10-day stay requirement had been filed with the court and that the motion was "in the best interest of the debtor, its estates, and the creditors."

The borrower that was forced into Ch. 11 is GIH-SPE II LLC, which acquired the property in July 2007 for $48.8 million and planned to redevelop the site with a new gaming resort. Follow the LLC trail back and the names George J. and John L. Marks show up. The Marks operate Chicago-based Mark IV Realty Inc.

Acting through Convention Center Drive LLC, Mark IV Realty acquired the property in 2000 from the World Wrestling Federation. In partnership with Delta Airlines and United Airlines, Mark IV renovated the property into the Greek Isles, a crew hotel and casino that opened in mid-2001.

The sale in mid-2007 to GIH-SPE II LLC was apparently only a recapitalization because the Marks still control the property, according to the Nevada Secretary of State's office. Published reports that the time of the sale suggested that the property was acquired by an affiliate of DI Development Group LLC, which is controlled by Harold Rothstein. George Marks has not returned phone calls seeking comment.

The lenders who stopped the planned auction a day before it was to take place with an involuntary bankruptcy petition are Beresford Bancorporation Inc.; Bigwal LLC; Windy Point Properties LLC; Dawn Place LLC; Foch Investments, Economy Currency Exchange; Hayner Group, and Frank O. Donnell. Canpartners said--in its motion seeking relief from the automatic stay resulting from the petition--that the lenders have failed to justify their claims against the borrower.

"Given the timing of the filing and the questionable standing of the petitioning creditors, [Canpartner] submits that the involuntary petition was filed in bad faith and the petitioning creditors have abused the judicial process solely to stall the foreclosure sale," Canyon stated in court filings. "Based on the absence of any equity cushion and the mounting losses in outstanding loan payments and accrued interest, Canyon lacks the adequate protection for its security interest in the property and is entitled to relief from the automatic stay to complete the foreclosure sale."

Canpartners said in court that an appraisal shows the property to be worth $44 million, down from $120 million in late 2007. The borrower owed $67 million on the $56 million loan that was used to acquire and renovate the property. The lack of owner equity, the casino's performance, predictions of further declines in value and performance, and the mounting cost of the foreclosure were some of the reasons Canyon was seeking a quick sale.

"We are now focused on assessing the property, and developing a plan to move forward," says Canyon Senior Director Richard Bosworth in a prepared statement. "We want to make it clear that ownership is committed to keeping the Greek Isles Hotel and Casino open for business as we determine the next steps for the property."

Peter Locke, a Principal at Spectrum added that although the current environment in Las Vegas is challenging, "the property's exceptional location, as evidenced by its proximity to the proposed Convention Center expansion and recent hotel/casino developments on the north-end of the Strip, should provide the new owners with significant upside potential through a redevelopment or repositioning of the hotel as the market recovers."

Greek Isles is located on Convention Center Drive between the Las Vegas Strip and the Las Vegas Convention Center on Paradise Road, where much development is planned, if not at all imminent given the recession. The Greek Isles property began operation in 1972 as the Royal Inn Casino. Amenities include a Broadway-quality 450-seat showroom and two smaller theaters, banquet and meeting space, an outdoor pool/spa, and a wedding chapel.

A couple years back, Marriott International spent upwards of $230 million buying up the block north of Greek Isles for an eventual convention hotel development. Immediately to the south of Greek Isle lies the Wynn Las Vegas Golf Course, which also is slated for eventual redevelopment. The convention center is also slated for an expansion.