Meanwhile, Fontainebleau continues to negotiate a sale pricewith Penn National Gaming. If it does, the price, expected to bewell below a previous $300-million offer, would become the stalkinghorse bid, according to the reports by the Las Vegas Sun andReuters. A stalking horse bid is one that other interestedpurchasers would have to top in order to be considered by theexaminer.

With no update on sale negotiations from Fontainebleau and amotion from the lenders to convert the reorganization to aliquidation, Judge Cristol lastweek ordered both sides to his courtroom to show cause whyhe shouldn't appoint an examiner, which he said would costsubstantially less and result in a quicker sale than the Ch. 7liquidation process.

Fontainebleau attorneys reportedly argued against theappointment of an examiner, saying while quicker than theliquidation process it could slow the sale process currentlyunderway. Term lenders, who hold the bulk of the projects debt,spoke in favor of the examiner because it would make for a moretransparent process. Previously they argued that the mainindividual behind Fontainebleau, Miami developer Jeffrey Soffer,was conflicted due in part to his being both a debtor and acreditor in the process.

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