More Scrutiny of Station Casinos' Privatization

LAS VEGAS-US Bankruptcy Judge Gregg Zive this week signed off on a request by unsecured creditors to hire a private attorney to investigate possible wrongdoing in the $5.4-billion deal that took Station Casinos private in 2007, according to an article in the Las Vegas Sun. The locals’ casino operator filed for Ch. 11 bankruptcy protection in July; its casinos remain open.

Judge Zive is allowing the Official Committee of Unsecured Creditors to hire Eric Winston of Quinn Emanuel Urquhart Oliver & Hedges of Los Angeles. The approval comes despite the deal being declared above-board by a special litigation committee created by Station’s Board of Directors.

Zive reportedly said the creditors need to examine the process that led to Station going private and that, in so doing, it may challenge some of the findings of the special committee. Quinn reportedly said he wants to look at the documents that shaped the special committee’s opinion as well as talk to Deutsche Bank, a player in the privatization that is said to have declined requests from the special committee. For the full Las Vegas Sun article, click here.

While Station’s attorneys reportedly did not object to the investigation of the merger, last week they did object to the another investigation request, this one by its minority lenders to examine more recent decisions by Station management and its main lender, Deutsche Bank, for alleged conflict of interest. The minority lenders allege that the “stacked” corporate structure created to take the company private in 2007 is no longer viable because the common management cannot act in the best interest of the OpCo, PropCo and LandCo entities at the same time when each is bankrupt and has separate debt obligations. For that article, click here.