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LAS VEGAS-Fontainebleau Las Vegas LLC says the bankruptcy court on Friday approved its first-day motions, including payment of back wages and provides partial access to $201 million in cash collateral for “the ordinary course of business.” In so doing, the court overruled an objection by Bank of America, one of the final-stage lenders being sued by Fontainebleau for holding back $800 million in previously committed financing meant to fund the completion and opening of the plus-$3-billion resort. The bankruptcy and the lawsuit are being heard by the same judge.

Anchored by a 63-story tower, the 3.4-million-square-foot development is 70% complete, with some of the rooms on the lower floors of the tower already fully furnished. It was on pace to open later this year until Bank of America, Deutsche Bank and nine other banks that comprised the “revolver lenders” in March alleged a breach of the loan covenants and reneged on their financing commitment. The move effectively shut the project down and forced the three development entities into filing Ch. 11 bankruptcy last week.

After the funding was pulled, the number of workers on site fell to a few hundred from a few thousand. Today, 115 people are still being employed by Fontainebleau and site work has shifted from construction to asset preservation. In addition to protecting the structure and the construction materials from the elements, a Fontainebleau source tells GlobeSt.com there is now a “very significant” security contingent on site to deter theft and vandalism.

Fontainebleau LV is hoping to avoid the cost of fully weatherproofing the 63-story structure, which does not yet have all its windows installed. “The degree to which the development will be secured and wrapped will depend on the pace and outcome of a number of near-term events in the bankruptcy court,” Fontainebleau spokesman Lance Ignon tells GlobeSt.com. “Wrapping a building of that size in its entirety is an enormous, lengthy and costly undertaking; you don’t go forward with something like that unless you are absolutely sure you have to.”

On Wednesday Fontainebleau filed a motion for partial summary judgment on its lawsuit that if successful would force the revolver lenders to immediately hand over $656 million they refused to release in March. On Friday, Miami bankruptcy judge Jay Cristol scheduled a hearing for June 17 to consider the Fontainebleau’s request for a fast track schedule in respect of its lawsuit.

“Prompt adjudication of this motion will assist in the ultimate disposition of this case by establishing the revolver banks’ breach and plaintiff’s right to hundreds of millions of dollars in additional cash collateral,” state’s Fontainebleau’s motion. “Indeed, a favorable resolution of this litigation is the only means by which to obtain funding to complete construction of the project.”

Meantime, Fontainebleau LV wants to continue paying the remaining employees still being retained in addition to having some money for the ordinary course of business. On Friday, the bankruptcy judge agreed, authorizing payment of the company’s now $500,000 in bi-weekly and semi-monthly wage expenses and providing access to approximately $8.2 million of its $201 million of cash collateral for the ordinary course of business. A hearing to determine whether Fontainebleau gets access to the full $201 million has been set for June 30.

In giving Fontainebleau partial, interim access to its cash collateral, the judge overruled an objection filed by BofA. A bank representative did not immediately respond to a request for comment.

“Neither BofA, nor, to its knowledge, any of the revolving lenders (banks) participated in the negotiation of the terms of the proposed order attached to the cash collateral motion,” states the objection. “Neither BofA nor the revolving lenders has consented to the terms of the cash collateral order. The proposed cash collateral order was negotiated by a term lender steering group composed of term lenders, and its terms reflect a bias in favor of the term lenders over the interests of the revolving lenders.”

In addition to BofA, the revolver lenders named in the lawsuit are JPMorgan Chase, Merrill Lynch Capital Corp., Barclays Bank PLC, Deutsche Bank Trust Company Americas, 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. The list does not include one revolver lender with a $10 million commitment that is in FDIC receivership and is therefore not part of the suit.

Shortly after filing its lawsuit against the revolver banks in late April , Fontainebleau amended the complaint with more detail, claiming Deutsche Bank “sought to persuade other revolver banks to breach their commitments and has worked aggressively to discourage” a solution in order to minimize competition with Cosmopolitan, another resort project under construction on the Strip that Deutsche Bank took control of last year after the developer defaulted.

“In so doing, Deutsche Bank has breached the covenant of good faith and fair dealing…,” states the amended complaint.

Deutsche Bank had committed to providing 10% of the $800 million in revolver financing for Fontainebleau. The German bank has said the allegations are “meritless” and meant only to “distract” from the fact that the loan covenants have been breached.

Fontainebleau LV’s three development entities– Fontainebleau Las Vegas, Fontainebleau Holdings LLC and Fontainebleau Las Vegas Capital Corp.–filed for protection from creditors under Ch. 11 of the US Bankruptcy code on June 9. The bankruptcy filings of the three entities will be processed jointly and their lawsuit against the final-stage lenders all will be heard by Cristol, according to court documents. The filing, made in the US Bankruptcy Court for the Southern District of Florida, lists between 1,000 and 5,000 creditors, and assets and liabilities each in excess of $1 billion.

Along with the 3,800 hotel rooms in the 737-foot-tall tower, Fontainebleau Las Vegas is slated to include 27 restaurants, nightclubs and bars; a 100,000-square-foot casino; a 60,000-square-foot spa; a 3,200-seat performing arts center; 300,000 square feet of retail space; and 390,000 square feet of conference area and meeting rooms.

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