Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Fontainebleau Las Vegas Likely to Reach Settlement Deal
Author: Joel R. Glucksman
Date: November 28, 2013
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A four-and-a-half year bankruptcy case involving the failed Fontainebleau Las Vegas casino tower may be nearing an end. A U.S. bankruptcy judge said he was inclined to approve a settlement agreement in the messy Chapter 7 bankruptcy proceedings over the $2.9 billion tower, which is considered one of the largest busts in real estate history.
U.S. Bankruptcy Judge A. Jay Cristol said he was considering approving a $178 million settlement that would pay contractors roughly 25 cents on the dollar, according to the Miami Herald. Additionally, construction lenders would recoup nearly $89 million.
“I certainly have sympathy for all of the people who have money coming to them and seem to have been waiting forever,” said Judge Cristol in a court hearing, according to the news source.
The settlement funds would come from several organizations and investors involved in the failed project. Approximately $93 million would come from sale proceeds paid by Carl Icahn when he purchased the unfinished tower in 2010. The Herald notes that the money has been in a frozen escrow account pending the bankruptcy outcome. Title companies that backed the project would add another $33 million to the settlement fund, and the remaining $50 million would come from a completion guarantee funded by Jeff and Jacquelyn Soffer.
Construction of the skyscraper was halted in mid-2009 after the toll of the economic crisis hit the commercial real estate market hard, and forced the owners of the unfinished Fontainebleau to seek protection under the bankruptcy law. The building is still in the skeletal stage, and Chris Giunchigliani, Clark County commissioner, said she has received a barrage of complaints over the stalled project, which is considered an eyesore by the city, according to 8 News Now.
“I’m glad if they do the settlement,” Giunchigliani told the news source. “If they’re working that off, that actually then helps clean or prepare the road for something to maybe happen there.”
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