Station Casinos asks judge for extension in bankruptcy case

By Steve Green

Thursday, April 8, 2010 | 10:34 a.m.

Station Casinos Inc. on Wednesday asked its bankruptcy judge to further extend the period in which Station alone can pursue a plan to reorganize its Las Vegas locals casino empire.

With the recession reducing spending at its hotels and casinos, Station was unable to make required debt payments and filed for Chapter 11 reorganization in July.

Station on March 24 filed a reorganization plan in which lenders and Station insiders would keep five of the company's properties and certain land holdings.

The remainder of the company assets would be sold. Those assets include interests in 13 casinos, other land holdings and Indian gaming contracts.

Cash raised in the sale would be used to pay some of the company's debt and obligations, last reported as totaling $6.6 billion. Members of Station's founding Fertitta family plan to bid for the properties to be sold.

The five properties to be retained by members of the Fertitta family, Station co-owner Colony Capital and lenders to those properties are Red Rock Resort in Summerlin, Sunset Station in Henderson; and Boulder Station, Palace Station and the Wild Wild West in Las Vegas.

Red Rock, Sunset Station, Boulder Station and Palace Station are known in the bankruptcy case as the "Propco" properties because they are encumbered together by debt totaling $2.475 billion. Station's other assets are known as "Opco" properties.

Bondholders and creditors not involved in the deal involving the five properties have not yet responded to Station's reorganization plan and it's unknown if that plan will survive intact.

Bondholders alone are owed $2.3 billion by Station and, like other creditors, they are facing deep losses in the case as the recession has slashed the value of the properties to be sold or transferred. The Propco lenders alone have agreed to exchange their $2.475 billion claim for an ownership interest in the Propco properties and a $1.6 billion mortgage.

In large complex bankruptcy cases, reorganization plans typically are amended in response to creditor concerns. The plan for the Lake Las Vegas development in Henderson, for instance, was amended three times before the bankruptcy court allowed Lake Las Vegas to solicit votes from creditors on the plan.

In court papers filed Wednesday, Station asked that Judge Gregg Zive extend the period during which no other party may file a reorganization plan from May 24 to the dates the court has scheduled hearings on Station's reorganization plan: July 15 and July 16.

Station, in court papers, is now calling the transfer of the four Propco hotel-casinos to the insiders and lenders "essentially a foreclosure by the Propco lenders on those Propco assets that are collateral for the Propco loan."

In a filing Wednesday, Station said the sale of the Opco properties can be completed before the July 15-16 hearings. The company said that while it sells the Opco properties and seeks confirmation of its reorganization plan, it "should be allowed to pursue such efforts free of the concern that the exclusive period will expire."

"In order to ensure that the sale process will yield the highest or otherwise best bid for the Opco assets, the exclusive period should be extended to allow the (reorganization) plan solicitation and sale processes to run in parallel through the (plan) confirmation hearing date," Station said in its filing.

A May 5 hearing has been set on Station's request for an extension of the exclusivity period.