X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-The judge in the Fontainebleau bankruptcy case on Friday had the US Trustee appoint an examiner to complete the sale of the stalled $3-billion casino resort. The future of the project is now in the hands of Jeff Truitt of XRoads Solutions Group.

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.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.