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June 12, 2009

Las Vegas casino developers suing lender group

MIAMI

Casino-resort developer Fontainebleau Las Vegas LLC says it has filed for Chapter 11 bankruptcy protection after failing to get certain lenders to provide about US$800 million in construction funding to complete the company’s $2.9 billion property on the Las Vegas Strip.

Fontainebleau Las Vegas had filed a $3 billion lawsuit in April against Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas and eight other lenders in an effort to access the prearranged financing to pay its 3,000 construction workers and finish the project, which is 70 percent complete and had eyed an October opening.

The complaint alleged that the lenders terminated their agreement to provide an $800 million revolving loan due to one or more unspecified “events of default” by Fontainebleau. But the developers said they didn’t default on any part of their agreement. Bank of America spokeswoman Shirley Norton told The Associated Press in April that the bank was discussing “restructured financing” with the company.

The lawsuit was amended last month to charge that one of the lenders, Deutsche Bank, purposely interfered with contracts because the bank owns a rival resort also being built on the Strip, which is projected to open in 2010. The company is demanding additional damages from the bank.

Associated Press

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