Monday, Nov. 20, 2000 | 11:30 a.m.
The Vacation Village hotel-casino in Las Vegas filed for bankruptcy protection on Friday, less than a month after it was sued for allegedly defaulting on a $19 million loan from a Wells Fargo bank subsidiary.
Foothill Capital Corp., a Los Angeles loan company, sued Vacation Village Inc., its affiliate, Shangri La Ltd. and five individuals it identified as general partners of Shangri La on Oct. 24, alleging they failed to repay a one-year loan of $19 million at an interest rate of 14 percent when it came due on Sept. 14. The suit said $19.35 million was due as of Oct. 23. Shangri La owns a commercial shopping center called Sundance Plaza.
A hearing scheduled for today on Foothill's request to appoint a receiver for Vacation Village was stayed after the hotel-casino filed for Chapter 11 bankruptcy protection, which is designed to allow the debtor to retain control of its bankruptcy assets and continue its operations until a viable reorganization plan is filed.
Foothill, which said Vacation Village and Sundance generated more than $1.544 million in monthly revenues, sought a receiver to prevent the "misuse, dissipation and diversion" of a substantial portion of its collateral, which comprises cash and receipts generated daily by the hotel-casino.
Foothill said the $19 million loan is secured by the hotel-casino on south Las Vegas Boulevard, the shopping center, inventory, accounts receivables and proceeds from products, services and rents from both properties.
In its bankruptcy filing, Vacation Village listed assets totaling $148.7 million and liabilities of $21.28 million. The hotel-casino has 157 unsecured creditors.
"We're assuming Vacation Village filed Chapter 11 to stop the receivership hearing as well as foreclosure proceedings, and not to get out of their contractual relations," said Kevin Brandt, Foothill's attorney. "The receivership hearing will likely be stayed until the bankruptcy court issues an order that allows it to continue."
"We think the hotel-casino will likely remain open. The bankruptcy filing is unlikely to affect its operations and customers or Sundance's retailers," he said.
The hotel, which opened in 1990, has some 315 rooms and about 300 employees.
Vacation Village and its attorney, William McGimsey, could not be reached for comment.
Meanwhile, the state Gaming Control Board said it will continue to verify the hotel-casino's bankroll and monitor its operations to ensure it complies with state regulations during its financial difficulties.
"Vacation Village has been reporting to us their bankroll, slot statistics and the performance of their slot machines," said Dennis Neilander, a board member.