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
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Author: Sean M. Pena
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
Author: Jay McDaniel
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
Author: Donald M. Pepe
When to Settle and When to Fight: A Litigator's Framework
Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]
Author: Sean M. Pena
Types of Business Law Services Companies Actually Use
Business law services are legal services that help companies form, operate, transact, protect assets, manage risk, and resolve disputes. The phrase can sound broad because it is broad. A company may need help with entity formation one month, contract review the next, a commercial lease after that, and a business dispute later in the year. […]
Author: Scarinci Hollenbeck, LLC
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.