Friday, June 2, 2000 | 11:02 a.m.
After numerous delays, the Maxim hotel-casino in Las Vegas was finally auctioned Thursday -- but it's unclear what the would-be buyer will now do with the Flamingo Road property.
The new owner, identified as Revanche LLC, offered $10 million for the property at a foreclosure sale. The company has entered into an agreement with Larry Bertsch, the property's receiver, to continue operating the Maxim.
Bertsch and an attorney for Meralex, the Atlanta-based mortgage-holder for the Maxim, said the deal will result in the hotel remaining in operation. But neither could say who owns Revanche, or what their ultimate plans for the property are.
"I'm just here until they decide what they're doing with the property," Bertsch said. With his agreement, Bertsch said, "they could continue without closing the property. We're open for business."
All of the Maxim's 800 rooms are now in operation, though the casino remains closed. Bertsch said he has not been asked to seek a gaming license to operate the casino by Revanche.
"The intent all along was to keep the hotel open, keep it as a going concern," said John Curtas, attorney for Meralex. "By having this agreement, Meralex retires some of its debt, keeps the hotel open, and one day soon, will have a casino operating there."
Corporate records filed with the Nevada Secretary of State's office list Revanche's manager as N.L. Stevens III of Houston. Records indicate this company was incorporated April 14 -- six days before the Maxim was originally scheduled to be sold at auction.
Meralex was owed $42 million -- leaving a balance of $32 million still due from Premier Interval Resorts Inc., the Dallas-based company that owned the Maxim. Meralex could have bid up to the $42 million it was owed on the Maxim at Thursday's auction.
When asked why Meralex would accept a bid $32 million below the amount it was owed, Curtas said Meralex has agreements with Revanche to participate in revenues from operations at the hotel, though he said he didn't know specifics.
"(Meralex) will go after the Premier to the extent they can, and seek (repayment) of the deficiency the best they can," Curtas said.
The Maxim was closed on Nov. 21 by former lessor Ed Nigro. Nigro said he was forced to shut down the property after Premier failed to provide $300,000 in financing that would have allowed the Maxim to continue operating. Shortly thereafter, Premier defaulted on its mortgage to Meralex and declared bankruptcy.
Bertsch, appointed receiver of the property by a bankruptcy court, reopened the Maxim's hotel on December, though the casino never reopened.
Premier did not attempt to block a foreclosure of the property by Meralex, and the company set an auction date of April 20. But one day before the sale, three former Premier shareholders filed suit against Premier and Meralex in a bid to stop the sale.
In their lawsuit, the shareholders argued that Premier's and Meralex's controlling shareholders -- Gary Kornman and Howard Jenkins -- conspired in a "fraudulent scheme" to cause the Maxim's failure. The lawsuit revealed that one of Kornman's companies loaned $26 million of the $42 million to Meralex, which then turned around and loaned the cash to Premier. Attorneys for Meralex and Premier characterized this as a simple bridge loan, though attorneys for the former Premier investors questioned why Kornman wouldn't simply use the cash to buy the Maxim directly.
The investors tried to convince Judge Nancy Saitta to issue an order blocking a foreclosure sale, but Saitta denied this motion on May 25. In her ruling, Saitta said the plaintiffs had failed to prove their case for blocking the sale.
"I am deeply concerned about (the impact of delaying the sale) to the loyal workers of the Maxim, its vendors and unions," Saitta said. "It is the court's sincere belief the sale of the Maxim will enhance the ability of the Maxim to remain open."