Station Casinos bondholders seek delay in auction process

By Steve Green

Wednesday, June 9, 2010 | 10 a.m.

Bondholders standing to lose $2.5 billion in the Station Casinos Inc. bankruptcy case moved Tuesday to delay the Las Vegas company's auction process while they appeal a court ruling approving the bidding plan.

Bankruptcy Judge Gregg Zive in Reno on May 28 approved a plan in which 11 of the company's properties would be auctioned on Aug. 6, with Station's founding Fertitta family and certain lenders being the “stalking horse bidder” with a bid of $772 million.

Under the company's complex reorganization plan, five casinos wouldn't be auctioned. Four of those are being foreclosed on by lenders owed $2.475 billion for those four properties. The Fertittas and Station co-owner Colony Capital have struck a deal to manage and co-own those properties: Red Rock Resort, Sunset Station, Boulder Station, Palace Station and the Wild Wild West.

The 11 properties to be auctioned include Texas Station, the Santa Fe and the two Fiestas.

Two additional properties, Green Valley Ranch Resort in Henderson and Aliante Station in North Las Vegas, aren't in bankruptcy and won't be included in the auction. The Greenspun family, owner of the Las Vegas Sun, is Station's partner in those properties and the partners are working to restructure the debt against those hotel-casinos.

Station, like other hotel-casino operators, was hit hard by the recession and the company filed for bankruptcy last July after it was unable to meet debt obligations.

The bondholders, represented by the case's Official Committee of Unsecured Creditors, have argued the bondholders aren't being treated fairly in the proposed auction because the bidding procedures were drawn up to benefit the Fertittas.

On Tuesday, they filed their appeal of Zive's approval of the bidding procedures and said they elected to have the appeal heard in U.S. District Court for Nevada, rather than through the bankruptcy appellate process.

They also filed an emergency motion to stay proceedings in the case pending resolution of the appeal and said delaying action in the case won't hurt Station.

“In sharp contrast to the harm that Station Casinos Inc.’s creditors will suffer if the sale proceedings are not stayed pending its appeal in this case, neither Station Casinos nor any other interested party will be injured if a stay is granted. Indeed, while the appeal is pending, Station Casinos will continue to operate, pay its operating expenses and generate revenues,” the bondholders said in their filing.