Thursday, Dec. 2, 1999 | 11:02 a.m.
NevStar Gaming & Entertainment Corp. of Las Vegas, owner of the Mesquite Star hotel-casino, filed for bankruptcy Wednesday -- and may face removal from the NASDAQ exchange as early as today.
NevStar listed assets of $22.2 million and debts of $23.5 million; however, it claimed the appraised value of its assets was $34 million.
The number of creditors exceeds 200, but NevStar said in its filing that funds would be available to pay unsecured creditors.
NevStar's filing was Chapter 11, which allows the company to remain in operations while it reorganizes and refinances its operations.
NevStar also appears on the verge of losing its spot on the NASDAQ exchange. In Wednesday's Securities and Exchange Commission filing announcing the bankruptcy filing, NevStar said it was informed by NASDAQ officials that the company no longer complies with listing requirements.
Specifically, NevStar has yet to file its annual report for the 1999 fiscal year -- which was due more than two months ago -- and its stock price has fallen below the $1 minimum required for NASDAQ companies.
A hearing with NASDAQ officials is set for today, but "in light of the company's filing of the petition for relief ... the outcome of the hearing is uncertain," NevStar said.
Steve DuCharme, chairman of the Nevada Gaming Control Board, said the board would be monitoring the situation at NevStar, but would not take any action against the firm's gaming license at this time.
"We did a bankroll verification to determine if they had adequate funds to pay patrons, and they do have excess cash on hand," DuCharme said. "I assume this was done to give them some time to do a restructuring or reorganization.
"We just want to ensure there's adequate funds to pay patrons' winnings, and currently, there is."
DuCharme added that NevStar has given no indication that operations at Mesquite Star will be affected.
NevStar officials declined to comment.
NevStar has struggled financially ever since it opened the Mesquite Star in the summer of 1998. Built at a cost of $23 million, the hotel-casino has 210 rooms, a 12,000-square-foot casino, 410 slots and 10 table games.
Over the first nine months of operations in Mesquite, the company lost $5.24 million on revenues of $7.9 million.
But NevStar's financial performance after March 31 has been a mystery -- the company has not filed documents outlining its financial performance over the last two quarters, or for the fiscal year ending June 30. The company has been late with its federal financial filings for six consecutive quarters.
A SEC document announcing the most recent delay, filed Nov. 15, said that NevStar "has been working on a number of time-sensitive matters, including, but not limited to, refinancing activities." NevStar also said it was restructuring its accounting department.
For more than a year, NevStar has also been attempting to develop NevStar 2000, a $140 million hotel-casino and retail project in North Las Vegas. The city council blocked these development plans, but was forced to issue the permit by a federal judge in February.
Now, NevStar is tangling with partners Desert Mesa Land Partners Ltd. and TSRS Inc. over its role in the development of NevStar 2000. NevStar sued the two companies in November, asking for a court order forcing the two to honor NevStar's right to buy a 20 percent stake in the property.
Stephen Peek, attorney for NevStar, said no order has been issued in that case yet. He was unaware of Wednesday's bankruptcy filing, and said he didn't know what impact it would have on NevStar's North Las Vegas plans.