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Arnold M. Knightly

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Unsecured Station creditors seek trustee

3 Dec 2009

By Arnold M. Knightly
LAS VEGAS, Nevada -- The official committee of unsecured creditors in Station Casinos' bankruptcy case are asking the judge to appoint a trustee to take over the company's operations and develop a reorganization plan.

The committee's Tuesday filing states that a trustee is needed because Station Casinos "has been hopelessly mismanaged" and has "proven itself incapable of creating anything save acrimony between itself and various creditor constituencies."

Station Casinos spokeswoman Lori Nelson called the claims "wholly without merit."

"They're factually inaccurate and we will respond in due time through our pleadings," she said.

The motion claims the acrimony between Station Casinos and its debtors is increasing and that the gaming company is no closer to presenting a reorganization than when it filed for bankruptcy 10 months ago.

The motion also revisits claims that a $250 million lease agreement with a group of lenders is hurting unsecured creditors.

As part of Station Casinos' 2007 buyout, the company agreed to lease four casinos -- Red Rock Resort, Sunset Station, Palace Station and Boulder Station -- for $250 million per year from a subsidiary holding $2.5 billion in debt. Before the bankruptcy filing, part of the $250 million payment was used to pay debt, with the excess cash returning to the parent company.

The request to name a trustee follows an agreement made last month between a group of independent lenders and Station Casinos to withdraw a request for an examiner.

The lenders were guaranteed a chance to join negotiations on the restructuring plan.

The unsecured lenders called the agreement a "buy off" and said "such behavior would be unacceptable in any context but especially" in bankruptcy court.

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