Fontainebleau Las Vegas Asks Judge to Expedite Lawsuit
Motion Seeks Immediate Funding to Resume Construction
JUNE 11, 2009 - Fontainebleau Las Vegas, LLC filed a motion today for partial summary judgment on its lawsuit against its defaulting revolver lenders that asked a Miami bankruptcy judge for an expedited hearing to determine that those lenders breached their commitment to lend $656 million to the project. Fontainebleau Las Vegas is asking that those funds be turned over immediately to Fontainebleau Las Vegas.
Fontainebleau Las Vegas has asked the Honorable Judge Jay Cristol, who is presiding over the Chapter 11 proceedings, to order the revolving banks against which Fontainebleau Las Vegas has brought suit to fund $656 million they had refused to fund on March 3, 2009. That failure ultimately led to the decision by Fontainebleau Las Vegas to seek Chapter 11 bankruptcy protection on June 9, 2009.
Lawyers for Fontainebleau Las Vegas said a quick decision to force the banks to fund the revolving credit facility will greatly increase the likelihood of allowing construction to resume promptly on the 63-story casino resort. It will restore thousands of construction jobs, and eventually create more than 8,000 permanent jobs for the Las Vegas economy.
'Prompt adjudication of this motion will assist in the ultimate disposition of this case by establishing the Revolver Banks' breach and Plaintiff's right to hundreds of millions of dollars in additional cash collateral,' Fontainebleau Las Vegas lawyers wrote in their motion. 'Indeed, a favorable resolution of this litigation is the only means by which to obtain funding to complete construction of the project.'
Fontainebleau Las Vegas alleges that the revolver banks 'seized upon a deliberate misreading of the credit agreement to evade their obligations.' The lenders claimed that a March 2 notice of borrowing for $656 million did not comply with the credit agreement because a term-loan facility had not been fully funded. But Fontainebleau Las Vegas alleges that the plain terms of the credit agreement required that the term loan be 'fully drawn,' which the March 2 notice of borrowing accomplished.
"This lawsuit is an important and valuable asset of Fontainebleau Las Vegas' bankruptcy estate and its resolution is essential to a resumption of construction and a successful reorganization," said David Friedman, an attorney for Fontainebleau Las Vegas with the New York firm of Kasowitz, Benson, Torres & Friedman LLP.
The revolver lenders are led by Bank of America and include: JP Morgan Chase, Barclays Bank, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland, Sumitomo Mitsui Banking Corp., Bank of Scotland, HSH Nordbank and MB Financial Bank.
Fontainebleau Las Vegas is asking the bankruptcy court to set hearings on the matter at the court's earliest convenience.
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