Las Vegas Monorail wants more time in bankruptcy case

By Steve Kanigher

Friday, April 23, 2010 | 11:37 a.m.

A hearing is set for May 19 before U.S. Bankruptcy Judge Bruce Markell in Las Vegas to consider a motion by the Las Vegas Monorail to extend the amount of time it would have to file a bankruptcy reorganization plan.

The nonprofit monorail, which filed for Chapter 11 bankruptcy relief in January, initially had until May 19 to file its plan. The monorail seeks to extend that deadline to Aug. 17, and it also proposed an Oct. 18 deadline for the court to accept the plan.

The monorail continues to operate east of the Las Vegas Strip and has maintained that it generates enough revenue to keep the system running. But it has listed debts of between $500 million and $1 billion related to construction of the monorail and says that it does not generate enough revenue to pay down that debt.

Markell has yet to rule on motions by Ambac Assurance Corp. of Wisconsin — which insured the bulk of tax-exempt bonds issued by the state to construct the monorail — and by Wells Fargo Bank that the monorail should not be allowed to proceed under Chapter 11. Ambac and the bank, which has also done business with the monorail, have argued instead that it acts like a municipality under bankruptcy law and therefore should have filed under Chapter 9.

In arguing for the extension of time to file its reorganization plan, monorail President and CEO Curtis Myles stated in court documents that the monorail has made efforts to stabilize its business operations since filing for bankruptcy. He stressed the monorail's commitment to "maximize the value of its assets as a going concern" while also stating that it is cooperating with its creditors.

But Myles also said that the motions filed by Ambac and the bank in opposition to the monorail "imposed significant burden" on the monorail and its attorneys during the first 30 days of the case. Myles said these burdens included depositions of five monorail employees and the production of numerous documents in order to meet discovery requests made by opposing lawyers.

Myles said it was because of those burdens that the monorail was unable to devote time or resources to the formation of a reorganization plan.

"Because it is possible that this Chapter 11 case could be dismissed, I do not believe it is an effective use of the debtor's resources to formulate a plan of reorganization until the court has issued its ruling on the dismissal motion," Myles stated.