Tuesday, Nov. 21, 2000 | 11:09 a.m.
Vacation Village hotel-casino executives commented Monday for the first time on the property's financial troubles, saying the property filed for bankruptcy protection to avoid being foreclosed on by creditors trying to "get it on the cheap."
Vacation Village on south Las Vegas Boulevard filed for Chapter 11 bankruptcy on Friday, less than a month after it was sued for allegedly defaulting on a $19 million loan from Wells Fargo bank subsidiary Foothill Capital Corp.
Foothill, 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 Sep. 14. The suit said $19.35 million was due as of Oct. 23. Shangri La, which owns a commercial shopping center called Sundance Plaza, did not file for bankruptcy.
"We put Vacation Village into bankruptcy because there are a lot of people trying to steal the hotel-casino," said Philip Abramowitz, Vacation Village's attorney. "We're getting a refinancing plan ready. We've been here 10 years and will be here for a long time more."
A Monday hearing on Foothill's request to appoint a receiver for Vacation Village was stayed after the hotel-casino filed Chapter 11, 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.
In its bankruptcy filing, Vacation Village listed assets of $148.7 million and liabilities of $21.28 million. The hotel-casino has 157 unsecured creditors.
Terri Heers Thompson, one of Vacation Village's shareholders, said the hotel-casino has received offers from several new lenders to provide a loan of $25 million to $30 million. She said there are no plans to close any of Vacation Village's operations or to lay off the hotel-casino and Sundance Plaza's 350 workers.
"It's our intention to pay Foothill what it is owed, but we're not letting them take over the property," she said. "We hope to pay off the $19 million loan to Foothill within 60-90 days."
Thompson also revealed Vacation Village has received approval from Bass Hotels and Resorts, the owner of the Holiday Inn chain, to become a Holiday Inn franchise hotel.
"We'll be renamed Holiday Inn Las Vegas and dropping the Vacation Village name for the hotel-casino when the new financing is in place and we've upgraded the property to Holiday Inn standards," she said.
Thompson said Vacation Village also plans to build a timeshare development, comprised initially of 60 units and will retain the Vacation Village name for that development.
"Our future plan is to add more amenities such as the bowling alley and 200 more gaming machines, and we've received permission from Clark County to build up to 700 rooms." The hotel-casino currently has 315 rooms.
"We've paid every single monthly interest payment," Abramowitz said. "But the term on the loan was only one year and we didn't get financing in place to pay off the entire loan before term ran out. That's when Foothill filed the lawsuit."
"We were also in talks with Foothill to try to get an extension to repay the loans," Thompson said. "There was a (provision) for an automatic extention of six months, which they refused to grant to us. That's when we filed for bankruptcy."
Thompson said the hotel-casino has "never gone below minimum bankroll requirement and has passed every single audit the (state gaming) board ever made of us."
"But there's been difficulty growing because of our proximity to the airport. Clark County had a height restriction imposed after we were half-built. We are allowed to build up to seven stories," she said.