Nov. 21 (Bloomberg) -- Station Casinos Inc. doesn’t need an examiner to investigate how the company is handling its bankruptcy, the judge overseeing the case said, rejecting part of the takeover strategy pursued by Boyd Gaming Corp.

U.S. Bankruptcy Judge Gregg Zive said at a hearing in Reno, Nevada, that Boyd and other advocates of an examiner appeared to really want a trustee to take control of the company’s bankruptcy case, especially with regard to any potential sale. Zive delayed until Dec. 11 a decision on a related request to end the exclusive right of Station managers to propose a plan to reorganize the Las Vegas-based gambling company.

Boyd and a group of dissident lenders had asked Zive to appoint an examiner who could negotiate with potential buyers on behalf of Station. Boyd claims in court papers that Station has refused to consider its offer to buy some, or all, of the company’s 18 casinos in the Las Vegas area.

“I don’t think it could provide any meaningful purpose at this time,” Zive said yesterday in court, regarding the examiner request.

Since February, Station has been trying to reach an agreement with creditors to restructure much of its $6.5 billion debt, according to court papers. It filed for bankruptcy in July.

Proposal Withdrawn

The lenders, who made the initial request for an examiner, agreed to withdraw their proposal just before yesterday’s hearing. They told Zive they had worked out an agreement with Station to receive much of the information they were hoping an examiner would uncover.

The lenders include BNP Paribas, General Electric Capital Corp., Castlerigg Master Investments Ltd. And U.S. Bank National Association.

Zive said the ultimate outcome of the case, and who gets to propose a plan of reorganization, is still an open question. Should the Station managers lose the exclusive right to reshape the company as they choose, a competing plan that includes a sale of casinos could be proposed by Boyd or the lenders.

“There is an underlying premise that this case is destined to be a sale,” Zive said. “I don’t know that this is the case.”

Zive said anyone was free to make an offer for Station’s assets and Station was free to accept the offer, or not.

“We remain very interested in the Station’s bankruptcy case and look forward to the next hearing on Dec. 11,” Paul Kranhold, a Boyd spokesman, said in an e-mail.

The lenders, other creditors, Boyd and Station managers have battled each other over various issues since the company filed bankruptcy in July.

Buyout Probed

Unsecured creditors are investigating whether the leveraged buyout that took the company private in 2007 was legitimate. That buyout brought the company back under the control of the family of founder Frank Fertitta and Tom Barrack’s Colony Capital LLC. They had proposed a prepackaged bankruptcy plan on Feb. 3 that would allow them to retain control. That plan wasn’t approved by enough creditors.

The dissident lenders claimed Sept. 1 in court papers that their interests are being unfairly sacrificed to benefit Deutsche Bank Trust of America and other creditors.

The case is In Re Station Casinos Inc., 09-52477, U.S. Bankruptcy Court, District of Nevada (Reno).

To contact the reporter on this story: Steven Church in Reno, Nevada, at schurch3@bloomberg.net.

Last Updated: November 21, 2009 00:01 EST