Tuesday, July 10, 2012
California Tribe's Casino Files for Bankruptcy
Per the Wall Street Journal:
Southern California's Santa Ysabel Resort and Casino filed for bankruptcy protection as it faces threats of foreclosure from the Yavapai Apache Nation, which had lent the casino's owners more than $9 million.
The casino—which is owned by another tribe, the Iipay Nation of Santa Ysabel—will continue operating as it seeks to restructure its debt.
Santa Ysabel filed for Chapter 11 protection in U.S. Bankruptcy Court in San Diego. Chief Judge Peter W. Bowie has given the casino permission to continue paying its employees and other bills throughout the bankruptcy case. The casino, about 50 miles northeast of San Diego, ranks as one of its area's largest employers.
In February, a tribal court that governs federally recognized tribes granted the Yavapai Apache Nation a judgment for more than $9 million.
Executives at Santa Ysabel, which began operations five years ago, said this week that the Yavapai Apache Nation's move to collect on the judgment would cause it to shut down, putting its 120 employees out of work, according to court papers.
The bankruptcy case, which gives the casino some legal breathing room, was filed to "preserve the local community jobs, restructure the debts to the [Yavapai Apache Nation]...and preserve the estate for the benefit of all creditors," the facility's attorneys said in court papers.
A spokeswoman for the Yavapai Apache Nation couldn't immediately be reached.
The 37,000-square-foot casino overlooks Lake Henshaw in San Diego County. It features hundreds of slot machines and poker tables but ran into financial trouble even before it opened its doors.
The casino was initially designed to have a resort and hotel, but its owners had to forgo construction of the hotel when money became tight. The casino opened in 2007 just as the Southern California real-estate market took a hit and the nation's economy went into a tailspin. More bad news arrived when wildfires shut down the casino for a week, and the owners didn't provide enough funding to advertise the operations, according to court papers.
The facility was built with a $26 million loan from J.P. Morgan Chase JPM +0.85% & Co. and $7 million from Yavapai Apache Nation. The Yavapai Apache Nation later took over J.P. Morgan's debt related to the project, according to court papers.
The casino also has $1.3 million in unsecured trade debt.
If forced to shut down, the casino said, an auction of most of its property would bring in about $250,000. Gambling company IGT has the first lien on its machines.
Attorneys for the casino said it hasn't been able to make the monthly $50,000 payment it promised to the county for law enforcement and other services.