Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Allows Detroit to Keep Casino Tax Revenue
Author: Joel R. Glucksman
Date: October 8, 2013
Key Contacts
Back
Detroit will be allowed to continue accessing casino tax revenue during its bankruptcy proceedings while negotiations with creditors relating to these revenues take place, a bankruptcy court has ruled.
U.S. Bankruptcy Judge Steven Rhodes authorized the struggling city to take in the casino tax revenue – which amounts to roughly $11 million each month – despite objections from bond insurer Syncora Guarantee Inc., which tried to block Detroit from using the funds. Detroit collects roughly $180 million annually from three of its casinos, Reuters reports. Of these funds, nearly $15 million is deposited each month into accounts managed by U.S. Bank to meet collateral requirements. The financial institution also sets aside $4 million each month for quarterly payments to swap counterparties, which leaves Detroit with the remaining $11 million.
However, Syncora insured the swaps as well as a portion of the Detroit pension debt associated with these transactions, and lobbied to block the city from gaining access to the casino revenue. Rhodes ruled that Syncora does not have a lien on the funds and could therefore not inhibit the city from using them, Reuters reports.
The ruling comes as good news for Detroit, which has been heavily reliant on the casino revenue to stay afloat, both before and after filing its unprecedented $18 billion bankruptcy case. Emergency manager Kevyn Orr recently spoke at a deposition, where he noted that the casino revenue has been critical in helping the city meet its most basic obligations, the Detroit Free Press reports. Orr said that the city’s finances had dwindled so low that the paychecks of some city employees were bouncing. However, the casino revenue has been a consistent and steady source of income for the ailing municipality.
Although the court’s decision was a win for Detroit, it can expect to see several other legal challenges brought against it in the coming months. Many legal analysts are watching the case closely, as investors, creditors, and insurers are expected to challenge some of the more complicated provisions of bankruptcy law.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
What Founders Can Learn From Start-up Suits
High-profile founder litigation is more than just a media spectacle. For startup founders, these cases underscore the legal and structural risks that can arise when rapid growth outpaces formal oversight. While launching a new company can be both an exciting and deeply rewarding endeavor, founders must be mindful that it also comes with significant risks. […]
Author: Dan Brecher
Corporate Governance Reviews: A Practical Guide for New Jersey Companies
Every New Jersey company should periodically evaluate its governance framework. Strong corporate governance protects directors and officers, builds investor confidence, reduces litigation exposure, and positions a company for sustainable growth. The first quarter of the year is a great time to evaluate your corporate governance practices and perform any routine maintenance needed to keep that […]
Author: Ken Hollenbeck
What to Do After Being Served with a Lawsuit: Steps to Protect Your Legal Rights
Being served with a lawsuit is one of the most stressful legal events a business or individual can face. Whether the claim involves a contract dispute, an employment matter, an intellectual property issue, or another legal challenge, the actions you take in the first few days can significantly shape the outcome of your case. Acting […]
Author: Robert E. Levy
Will 2026 Be a Banner Year for SPACs? Understanding the Risks and Opportunities
Special Purpose Acquisition Companies (SPACs) continue to gain momentum as we move through 2026. After enduring a significant contraction following the 2021 boom and the regulatory scrutiny that followed, SPAC activity rebounded sharply in 2025 and now carries forward into 2026 with real momentum. The SPAC resurgence reflects broader improvements in both market conditions and the […]
Author: Dan Brecher
Why Compliance Monitoring Matters for NY and NJ Businesses
Compliance programs are no longer judged by how they look on paper, but by how they function in the real world. Compliance monitoring is the ongoing process of reviewing, testing, and evaluating whether policies, procedures, and controls are being followed—and whether they are actually working. What Is Compliance Monitoring? In today’s heightened regulatory environment, compliance […]
Author: Dan Brecher
When Are New Jersey Business Owners Personally Liable for Corporate Debt?
New Jersey personal guaranty liability is a critical issue for business owners who regularly sign contracts on behalf of their companies. A recent New Jersey Supreme Court decision provides valuable guidance on when a business owner can be held personally responsible for a company’s debt. Under the Court’s decision in Extech Building Materials, Inc. v. […]
Author: Charles H. Friedrich
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.