Black Gaming, LLC, based out of Mesquite, Nevada was approved for a Chapter 11 bankruptcy reorganization plan. Due to the recession, Black Gaming was unable to pay its debt of $253.4 million. During the case, the value of all assets was estimated at between $85 and $90 million.
What Does this Mean?
The reorganization plan will allow Black Gaming to restructure its debt so the entity will owe $143 million less. The result is a much more manageable financial structure. This will help them become a stronger organization that will focus more on providing the best entertainment value for their money.
The Terms of the Bankruptcy Plan
There are a few terms of the plan in which the company must adhere. For instance the $14.8 million Senior Credit Facility that Black Gaming owes Wells Fargo Foothill Inc must be paid in full. Additionally, any unsecured claims which include those from vendors are to be paid in cash to the maximum allowed by the bankruptcy code.
Also the Senior Secured Noteholders will replace their notes, valued at around $143 million, for a new credit facility equating to approximately $62.5 million. Furthermore the Senior Subordinated Noteholders will have the ability to purchase equity interests in the Reorganized Black Gaming as a substitute for their notes and claims.
click here to see most Popular PagesIn addition, Black Gaming executives, owner Robert R. Black Sr. and a Newport Global Advisor must contribute $18.25 million as a substitute for 100 percent of the established equity interests within the reorganized company. All executives will remain in their current roles with their current titles.
The Unsecured Noteholders
Unfortunately the Unsecured Noteholders are still owed $75 million by Black Gaming. As a result attorneys were considering filing an objection to the reorganization plan as it doesn’t include this group. They were also scrutinizing the plan as well as the value of the assets presented during the case.
Last week the deadline came and went with no objections filed. The U.S. Trustees office also had a few objections, but Black Gaming overcame these as well. Accordingly the terms of the bankruptcy plan will remain as-is.
Gaming across the country has been damaged by the recession and this is one result. This plan should help Black Gaming return to profitable margins while paying off their debt. Unfortunately the Unsecured Noteholders will suffer. Since Black Gaming is a major employer and presence in Mesquite, Nevada, this action needed to be taken.
