Debbie Reynolds creditors want bidding reopened

David Siegel is prepared to go as far as it takes to win control of the Debbie Reynolds hotel-casino from the World Wrestling Federation, and some of the resort creditors who once opposed him are lining up to support his eleventh-hour bid.

"We are appealing," Siegel said Friday, referring to a bankruptcy judge's ruling last week denying Siegel the right to make a new $11.5 million bid for the property. "And wherever we have to take it, we'll go as high as we have to."

"The committee would support that," said Tim Cory, attorney for the Debbie Reynolds' unsecured creditors committee.

A WWF-headed joint venture bid $9.27 million for the Debbie Reynolds at a public auction August 5, but later raised its offer to $10.16 million to placate creditors concerned they weren't getting enough money.

Siegel later bid for the property in a bankruptcy court hearing, but dropped out when the WWF's offer reached $10.65 million. U.S. Bankruptcy Court Judge Robert Clive Jones approved the WWF joint venture as the buyer, and WWF officials have been moving ahead with plans to reinvent the Debbie Reynolds as a wrestling-themed resort.

But the WWF is not scheduled to close on its purchase until Thursday, and its offer does not repay all liens against the property.

Saying he was inspired when he saw Debbie Reynolds singing "Tammy" in a television movie, Siegel last week made his $11.5 million offer. That offer would make all of the property's secured creditors whole.

Jones said Siegel was too late.

"The court holds that it does not have the discretion to reconsider the order confirming sale or to reopen bidding," wrote Jones.

But Jones said if he could re-open bidding, he would.

The unsecured creditors -- trade creditors who provided the Debbie Reynolds with everything from its electric sign to its food -- never got a chance to express their support for Siegel's offer, said Cory.

"We really didn't get a chance to express our support to the court," Cory said.

Under Siegel's offer, the unsecured creditors wouldn't get any cash up front -- $11.5 million is enough to pay the secured claims only. But more cash in the pipeline means there's a greater chance the unsecured creditors will get some compensation, said Cory. The unsecured creditors also get a 5 percent equity interest in the reorganized Debbie Reynolds operating company under Siegel's plan.

"It's more than nothing and it could be valuable," said Cory.

Jones has been handling the case "in equity," Cory said, meaning he has been taking whatever steps are necessary to increase the amount of money paid creditors. For instance, he allowed the WWF to up its auction bid, and later allowed Siegel to up the WWF's $10.16 million offer. Because Jones has already taken unusual steps in the name of fairness, Cory believes case law would allow him to re-open bidding for the Debbie Reynolds, even at this late date.

"I think he has the discretion to do it," Cory said. "He probably has the discretion not to do it."

Bob Olson, attorney for Resort Funding, owner of $6.8 million in mortgage claims against the Debbie Reynolds, also expressed lukewarm support for Siegel's offer.

"Our client supports the sale of the property (to either the WWF or Siegel), but is not opposed to the debtor receiving the $11.5 million (Siegel) offer," said Olson.

Both Olson and Cory have opposed Siegel in the past.

But Neil Beller, attorney for Galt Capital's $1.3 million second mortgage lien and Gregory Orman's $700,000 fourth mortgage lien against the property, said his clients would prefer the WWF offer, which is due to close Thursday.

Mortgage creditors are fully paid under both the WWF and the Siegel plan.

"As long as our clients are paid in the entirety, it doesn't make any difference to them (who ends up with the property)," Beller said. "Obviously we would like this thing to be done sooner rather than later."

Marc Risman, attorney for the WWF, argued vehemently against allowing the Siegel bid.

"How can Siegel, who had an opportunity to bid at the auction and sat on his hands ... what equity is there, what fairness is there, for him to go home ... and say, gee, I wish I'd bought it?" Risman said.

Siegel argues that his bid provides a more equitable solution to a greater number of people.

"There's so many people that are going to be helped, and the only one that will be hurt is the WWF," Siegel said.

Siegel is putting his money where his mouth is. In addition to the $2.5 million he has already wired the resort's escrow account to hold his place as a bidder, and the $250,000 he put into the Debbie Reynolds earlier this year to keep it running during bankruptcy, Siegel is paying all attorney fees and court costs for the Debbie Reynolds appeal.

"I'm paying the bills," he said.

Whether or not he buys the Debbie Reynolds, Siegel plans to develop time-share units in Las Vegas. His company, Central Florida Investments Inc., is a large worldwide time-share developer.

"I'm going to do a major time share project in Las Vegas," Siegel said.

He once planned 1,000 new time-share units on the Debbie Reynolds property, but now says the property would only support a couple of hundred new units. Siegel is looking at other sites to develop time-shares.

"I've been looking in Las Vegas for two to three years now," Siegel said.

The Debbie Reynolds has always been seen by Siegel as a way to get a "foot in the door" of the Las Vegas market, he said. And as a way to help Debbie Reynolds.

"This is Debbie Reynolds' baby," Siegel said. "If we could save it for her, it would be wonderful."

There are plenty of other places more suitable for what the WWF wants to do, Siegel argued.

"There's probably a dozen locations better than this one for what they want to do," Siegel said. "If there's any justice out there, (the judge will) reopen (bidding)."

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