Fontainebleau Las Vegas Files for Chapter 11 After Lenders Renege on Lending Commitment
Chapter 11 to Facilitate Debt Restructuring | Lawsuit Against Lenders Filed in Miami Bankruptcy Court | Filing Does Not Affect Miami Hotel
Fontainebleau Las Vegas has reached a provisional agreement with a group of its non-defaulting lenders for the use of cash for the administration of its bankruptcy case, and is simultaneously in negotiations to obtain financing to recommence construction at the project.
Fontainebleau Miami Beach, which is a separate legal entity, is not included in or affected by the filing and continues to operate as normal. Turnberry West Construction Inc., the project’s general contractor, also is not included in the filing.
Fontainebleau Las Vegas also announced that it withdrew without prejudice its $3 billion lawsuit in Las Vegas against certain of its lenders and refiled the case in the U.S. Bankruptcy Court in the Southern District of Florida, Miami Division, where the Chapter 11 petitions were filed.
Fontainebleau Las Vegas originally filed the lawsuit on April 23, 2009 against Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas and certain other lenders after they reneged on their contractual commitments to provide the Company with almost $800 million in prearranged funding. The lawsuit was amended on May 12 to include allegations that Deutsche Bank Trust Company Americas was “seeking to destroy the Fontainebleau in order to minimize competition” with the nearby Cosmopolitan Resort and Casino, which is wholly owned by a Deutsche Bank subsidiary.
Since its lenders reneged on their commitments in April, Fontainebleau Las Vegas has repeatedly requested that those lenders meet their funding obligations. Withdrawal of the revolving credit facility forced the project to halt nearly all construction and resulted in the loss of more than 3,000 union construction jobs.
"Fontainebleau Las Vegas will continue to aggressively prosecute claims against these lenders for failing to honor their contractual commitments," said Scott Baena of Bilzin Sumberg, bankruptcy counsel to the company. "The damage caused by the bad faith of these lenders has not only caused financial hardship to Fontainebleau Las Vegas and its employees, but also to the company's creditors throughout the United States, when economic circumstances are such that they can least afford it."
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