Las Vegas Monorail Sends Latest Reorganization Plan to Judge
Las Vegas Monorail Co. officials will know their plan to reorganize the insolvent, driverless tram is approved if they get a call from the clerk of the judge overseeing the company’s bankruptcy case.
U.S. Bankruptcy Court Judge Bruce A. Markell ended a hearing on the plan today by telling lawyers that if they don’t hear from his staff, he is rejecting the plan a second time. He didn’t say when he might rule.
“To the extent I decide I would like to confirm the plan I will have my deputy call and ask for any updated findings of fact,” Markell said today in U.S. Bankruptcy Court in Las Vegas.
Markell rejected the first plan in November, finding it wasn’t economically feasible, in part because it proposed paying bondholders $44.5 million by issuing new debt.
Las Vegas Monorail is trying to get out of bankruptcy and pursue an expansion plan as Las Vegas recovers from its steepest gambling and convention decline, casino operators such as MGM Resorts International (MGM) and Caesars Entertainment Corp. (CZR) have said. Proceeds for casinos on the Las Vegas Strip climbed 5.1 percent last year and 4.1 percent in 2010, after record declines of more than 9 percent in 2008 and 2009.
Markell found that the last plan was unrealistic because Las Vegas Monorail couldn’t afford the debt it was taking on to pay bondholders, according to court documents. He was also critical of the 10 percent interest rate on that debt.
The new plan pays bondholders with $13 million in new debt that carries a lower interest rate. Should revenue rise above a certain level, bondholders would share in the extra money, according to the proposed plan.
The company said it changed its plan to meet Markell’s concerns.
Las Vegas Monorail’s 3.9 mile track runs from near the Las Vegas Strip to the convention center and carries passengers between gambling resorts. One of those resorts, the Sahara Hotel, closed last year, causing ridership to drop and a loss of about $800,000 in fares for the second half of 2011, Monorail said in court papers.
The case is In re Las Vegas Monorail, 10-10464, U.S. Bankruptcy Court, District of Nevada (Las Vegas).
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