Las Vegas Sun

March 28, 2024

Fontainebleau wants expedited hearing on $656 million

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Fontainebleau Resort

The Fontainebleau, construction stopped, is seen dark along the Strip. Launch slideshow »

The bankrupt Fontainebleau resort moved Wednesday for a quick resolution of its dispute with bank lenders.

Fontainebleau Las Vegas LLC said it filed a motion for partial summary judgment in its lawsuit against its revolver loan lenders. The motion asked a Miami bankruptcy judge for an expedited hearing on Fontainebleau's claim those lenders breached their commitment to lend $656 million to the project.

Fontainebleau, with 63 stories and 3,800 rooms, was about 70 percent complete when work ground to a halt on the resort on the Las Vegas Strip this spring because of the dispute with the lenders.

Fontainebleau -- which previously said the banks had committed to fund $790 million needed for the project -- is now asking that the $656 million be turned over to it immediately.

Lawyers for Fontainebleau Las Vegas said a quick decision to force the banks to fund the revolving credit facility will greatly increase the likelihood of allowing construction to resume promptly on the casino resort. It will restore thousands of construction jobs, and eventually create more than 8,000 permanent jobs for the Las Vegas economy, Fontainebleau said.

"Prompt adjudication of this motion will assist in the ultimate disposition of this case by establishing the revolver banks’ breach and plaintiff’s right to hundreds of millions of dollars in additional cash collateral," Fontainebleau said in the motion. "Indeed, a favorable resolution of this litigation is the only means by which to obtain funding to complete construction of the project.’’

Fontainebleau Las Vegas alleges that the revolver banks "seized upon a deliberate misreading of the (Fontainebleau) credit agreement to evade their obligations."

At issue, Fontainebleau says, is the revolver banks' refusal to fund the $656 million revolving loan request because, they said, a $1.05 billion term loan facility had not been fully drawn upon. Fontainebleau insists it fully drew upon the $1.05 billion term loan before seeking the $656 million revolver loan.

"This lawsuit is an important and valuable asset of Fontainebleau Las Vegas’ bankruptcy estate and its resolution is essential to a resumption of construction and a successful reorganization," said David Friedman, an attorney for Fontainebleau Las Vegas with the New York firm of Kasowitz, Benson, Torres & Friedman LLP.

The revolver lenders are led by Bank of America, where a spokeswoman on Wednesday said the bank isn't commenting on Fontainebleau.

Fontainebleau filed for bankruptcy protection Tuesday and so far the banks haven't said why they halted funding.

Observers have noted the project may have faced cost overruns.

They've said that, because of the recession and the oversupply of hotel rooms in Las Vegas, Fontainebleau likely would have lost money and been unable to cover its debt payments if it had opened as scheduled this year.

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