Nov. 3 (Bloomberg) -- Greektown Holdings LLC, the bankrupt hotel and casino in Detroit, had a hearing on its turnaround plan postponed after noteholders including Manulife Financial Corp. and OppenheimerFunds Inc. filed a competing proposal.

Under the rival plan, filed yesterday in U.S. Bankruptcy Court in Detroit, Greektown and its units would keep control of their assets instead of transferring ownership under the company’s own plan to pre-bankruptcy lenders led by Merrill Lynch & Co.

The new plan “will maximize the value of the debtor’s estates and provide a higher recovery for all creditors than is provided under the debtor’s plan,” the noteholders’ lawyer, Allan Brilliant of Goodwin Procter LLP in New York, said in the filing.

The noteholders’ plan calls for a higher valuation of Greektown’s assets, a $200 million equity offering, the issuance of as much as $400 million of new secured notes and a higher recovery for general unsecured creditors, the group said. A hearing on Greektown’s plan that was scheduled for today was adjourned until tomorrow.

The group includes funds managed by Toronto-based Manulife, its Boston-based John Hancock unit and MassMutual Financial Group’s OppenheimerFunds. They claim their plan would fully repay Greektown’s bankruptcy financing loan, distribute as much as 6 percent of bondholder claims, and let bondholders join in a rights offering.

Plan Withdrawn

An earlier competing plan filed by businessman Tom Celani and Greenwich, Connecticut-based investment firm Plainfield Asset Management LLC was withdrawn last month after it failed to win votes from affected creditor classes.

Merrill Lynch, a unit of Bank of America Corp., had called for the competing Plainfield plan to be rejected because it didn’t pay enough to pre-petition lenders owed $315 million.

Greektown, owned by a tribe of the Chippewa Indians, filed for bankruptcy in May 2008, blaming cost overruns in the $332 million construction of a new hotel and gaming floor. The casino, one of three in Detroit, employed about 1,700 people and attracted 15,800 visitors a day, the company said at the time.

The case is Greektown Casino LLC, 08-53104, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.

Last Updated: November 3, 2009 13:36 EST