Monday, Dec. 20, 1999 | 10:52 a.m.
The owner of the Maxim hotel in Las Vegas has blamed its bankruptcy on former operator Ed Nigro, claiming missed rent payments forced it to default on the Maxim's mortgage.
Nigro, however, said these claims are false and that Premier deliberately misled a bankruptcy judge in its filings.
Premier Interval Resorts, the Dallas-based owner of the Maxim, claimed in a Clark County District Court lawsuit that it hadn't been paid rent by Nigro's Max Gaming since July -- and that past-due rental payments now exceed $6.25 million. These missed rental payments, Premier claims, forced its October default to Meralex, the mortgage holder. Premier declared bankruptcy in Texas earlier this month.
But Premier won't have a chance to attempt to collect on that alleged debt any time soon, as Max Gaming has also declared Chapter 11 bankruptcy.
The company listed both debts and assets between $1 million and $10 million. The filing listed Premier as a creditor, but didn't state how much was owed to that company.
But Ed Nigro, president of Max Gaming, called Premier's rent claim a deliberate lie.
"My father taught me that omitting key facts is a lie, and by that definition they've lied to (the Nevada Gaming Control Board), employees and the courts here," Nigro said. "I'm tired of this."
The Maxim closed on Nov. 21 after Nigro said he ran out of cash to keep the property operating. Nigro blamed this closure on Premier's failure to provide $300,000 in financing -- funds he said were called for under his lease with Premier. As a result, Nigro informed Premier that it had breached the lease agreement with Max Gaming and that the lease would be terminated.
Premier had supplied $500,000 in financing to the property in July to cover operating deficits. But the company balked at Nigro's second request, after the sides clashed on Premier's demand that Max Gaming sign an agreement subordinating all other debts to Premier's.
The move put 690 employees out of work, and Meralex assumed control of the property. Under the direction of receiver Larry Bertsch, the Maxim has since reopened 400 of its 800 rooms, but all casino operations remain closed.
Max Gaming was forced to file for bankruptcy Dec. 10 following a temporary restraining order by a federal bankruptcy judge in Dallas. This order, issued Dec. 9, forced Max Gaming to halt all spending while Premier's bankruptcy case was resolved. The funds were frozen because Premier is disputing Max Gaming's ownership of them.
The filing said Premier had $900,000 in cash, but was faced with its "immediate demise" unless it filed for bankruptcy protection.
Max Gaming claims the order was issued without its participation in hearings or the presentation of any evidence. The company branded the restraining order a violation of federal bankruptcy procedures.
"This judge issued a TRO that stopped me from redeeming chips, from complying with audits, from hiring attorneys, anything," Nigro said. "We have no representation down there and the judge is taking things at face value."
It isn't the first time Max Gaming has disputed Premier's court procedures. On the evening before Thanksgiving, Premier won a similar restraining order against Max Gaming -- and court transcripts indicate Premier was later chewed out by a Nevada judge for telling him "half the story."
The order came after Premier filed its lawsuit against Max Gaming Nov. 24. This lawsuit, filed less than an hour before the courts closed for the holiday, claimed that Max Gaming was attempting to remove $2 million in cash and assets from the Maxim to pay off its own liabilities. The lawsuit also claimed Max Gaming was trying to remove gaming devices and financial records from the property.
"Max Gaming brought nothing into the Maxim, and it is not entitled to take any property out when it abandoned its leasehold," Premier said.
Premier argued it would need the cash and machines to reopen the Maxim, which closed three days before. But Max Gaming said it was on the hook for $4.7 million in liabilities incurred running the Maxim -- and although those debts should have been assumed by Premier, that was unlikely to happen, because of Premier's bankruptcy filing.
But a Nevada judge heard only Premier's argument on the evening of Nov. 24. After contacting him by telephone, Premier attorneys convinced District Court Judge Gene Porter to issue the restraining order, the court transcript says. Nigro said he was only informed about this restraining order at 7 p.m. that evening.
The order put Max Gaming into a precarious position, since it had to pay laid-off Maxim employees on Friday. After a series of frantic phone calls, Max Gaming attorneys reached Judge Michael Cherry at home on Thanksgiving Day. Cherry altered the restraining order to allow the payment of employees and payroll checks were issued the next day.
But the incident later drew the wrath of Porter.
"I'm not happy with you or your firm," the transcript quotes Porter as telling a Premier attorney in court hearings. He said the firm told "half the story" in order to get a restraining order.
Premier's attorney explained the move wasn't a deliberate attempt to take advantage of the holiday. The case was supposed to be handled by Judge Ron Parraguirre, but he removed himself from the case Nov. 23, because of a relationship between his wife and Max Gaming. The case was then to be reassigned to another judge at random.
The pending removal of the disputed assets forced Premier to act at the last minute, Premier's attorney claimed.
The order was dissolved Dec. 3, but was resumed six days later by the Texas judge. Premier won the second order using essentially the same tactics it did in Las Vegas, Max Gaming claims.
As for the rent claim made by Premier, Nigro claims Premier is telling only half the story again. Rent payments were only called for under the lease if the Maxim had been making money, and it hadn't been, Nigro said. And even if rent payments had been made, Nigro said the first $3 million was supposed to have been loaned to Max Gaming to allow property improvements.
"When they bought it, they knew it wasn't making enough money to pay rent," Nigro said.
At the end of the lease, all accrued rent was to be forgiven, Nigro said.
Now, state officials are preparing to join a petition to move Premier's bankruptcy filing to Nevada, Nigro said.
"They've embarrassed me and embarrassed the state, and they shouldn't be allowed to do that," Nigro said.
A Gaming Board official could not be reached for comment on Nigro's assertion the agency may join in the petition to move the case to Nevada.