Truitt is a principal in the Santa Ana, CA-based consultancy's corporate restructuring unit. He specializes in recapitalizing financially distressed gaming and hospitality businesses. Truitt did not make himself available Monday afternoon for comment on the assignment.

US Bankruptcy Judge A. Jay Cristol in Miami in early October ordered both sides to court to show cause why he should not appoint an examiner to accelerate the sale of the 63-story, 3,800-room casino resort. The development was 70% complete when construction was halted this spring, shortly final-stage lenders decided not to provide the money they promised, an event that precipitated the developers' Ch. 11 bankruptcy filing and its related lawsuit.

Judge Cristol opted to go ahead with the appointment of an examiner after a hearing on Oct. 7 but delayed the appointment until late last week. Among other things, he said an examiner would remove any potential conflicts of interest and result in a quicker sale than the conversion of the case to a Ch. 7 liquidation, a motion for which had been filed by some lenders.

Led by Miami developer Jeffrey Soffer, Fontainebleau has been trying to negotiate a purchase and sale agreement with Penn National Gaming that, given the examiner's appointment, would become the stalking horse bid. If it does, the price is expected to be well below a previous $300-million offer. Fontainebleau attorneys reportedly argued against the appointment of an examiner, saying while quicker than the liquidation process it could slow the sale process currently underway.

Term lenders, who hold the bulk of the projects debt, spoke in favor of the examiner because it would make for a more transparent process. Previously they argued that Soffer was conflicted due in part to his being both a debtor and a creditor in the process. Fontainebleau attorneys countered that Soffer had recused himself from the process but Judge Cristol reportedly responded that without an independent examiner, "nobody's going to believe [Soffer's] not running the show."

The potential Penn National deal would include $16 million in debtor in possession financing that would allow Fontainebleau to repay the term lenders their costs to finance the bankruptcy case and provide some funds for stabilizing the project including needed work on the roof and replacement of some windows, according to court documents. The potential deal includes a financial incentive for the buyer to complete the project for less than $1.5 billion as well as a 3% break-up fee of the undisclosed purchase price.

Instant Insights /

Examiner Appointed for Fontainebleau Sale

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