June 21 (Bloomberg) -- Las Vegas Monorail Co., the bankrupt nonprofit company that proposed paying bondholders about 9 percent of the $500 million they are owed, won court permission to send its reorganization plan to creditors for a vote.
U.S. Bankruptcy Judge Bruce A. Markell agreed to approve a disclosure statement for the plan yesterday after asking lawyers for the company and creditors to modify the wording, Susan Freeman, an attorney for bond trustee Wells Fargo Bank NA, said in an interview.
“The parties are supposed to work out the tweaks to the disclosure statement the court had requested,” Freeman said. Should they fail to agree they will return to court next week, Freeman said.
Under the company’s reorganization plan, bondholders owed $207.3 million would get nothing, while higher-ranking creditors owed $500 million would be given $44.5 million in new debt.
Markell will take the vote of creditors into consideration when he deciding whether to approve the plan. The judge set aside Sept. 14 and Sept. 16 for a final hearing on the reorganization proposal, Freeman said.
The 3.9-mile (6.3-kilometer) driverless transportation system runs from near the Las Vegas Strip to the convention center and carries passengers between gambling resorts.
The plan is designed put the company into position to get grants, or new loans of about $12 million by 2019. That money is needed to build two new stations “so that the monorail does not cease to operate sometime in the next 8 years,” it said in court papers filed June 6.
Ambac Assurance Corp. insured at least $451 million in tax-exempt bonds issued in 2000 by the Nevada Department of Business and Industry that were backed by a pledge of revenue from the monorail, according to court papers.
After Las Vegas Monorail filed for bankruptcy last year, Ambac said the case might cost the New York-based bond insurer almost $1.2 billion. Ambac’s holding company, Ambac Financial Group Inc., filed for bankruptcy in November in Manhattan.
Las Vegas Monorail said in its bankruptcy petition that its assets were $10 million to $50 million.
The case is In re Las Vegas Monorail, 10-10464, U.S. Bankruptcy Court, District of Nevada (Las Vegas).
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