Bankruptcy Judge Tours Greektown

From the Detroit News (via Pechanga):

Could the big empty shell of a room tucked away in a corner of Greektown Casino-Hotel’s downtown complex serve as a viable event center?

That’s the question facing bankruptcy judge Walter Shapero this afternoon as he tours what Greektown lawyers call an event center and what attorneys for the City of Detroit are calling a breach of contract.

Greektown is arguing for a tax rollback from the city and state that would save it millions a year in taxes levied on gaming revenues. That rollback is dependent on compliance with a revised development agreement approved by Detroit City Council in 2006.

Greektown wants Judge Shapero to rule that the casino has complied with the agreement, opening the door to lower taxes and giving the casino the ability to transfer the agreement, along with the lower tax rate, to a new owner should it decide to sell.

Greektown, which entered bankruptcy on May 29, is seeking two solutions to its current debt woes; the city’s third-largest casino now owes more than $755 million, according to court documents. It’s looking at a debt reorganization that would leave the current owners, the Sault Ste. Marie Tribe of Chippewa, in control, or an outright sale of the property to pay off current debtors.

Aside from saving the casino money through a lower tax structure, allowing the revised development agreement to be transferred to a new owner — should Greektown decide to exit bankruptcy through a sale — would boost the casino’s value to potential bidders. Chuck Moore, a financial adviser working with Greektown on its bankruptcy case, testified in a previous court proceeding that the tax rollback could add more than $100 million to a sale price of Greektown.

City lawyers, however, say that Greektown has reneged on a key component of the plans approved by City Council — a promise to build a viable events center — which invalidates the casino’s request for a rollback. City planning and development officials testified this morning before Judge Shapero that casino officials changed their plans from a seated theater space to nonseated “white box” area with few amenities for productions and other uses. Marcell R. Todd, director of the council’s planning commission, also said recent communication from Greektown executives indicated that the casino may not adhere to earlier promises to have the event center — which currently sits unfinished — ready within six months of February, when the casino filed for the tax rollback.

Moore said some potential buyers of Greektown — which have been courted through tours of the property in recent weeks — have a variety of ideas of what to do with the space, leaving it best to remain flexible for the time being.

Shapero will be touring the facility this afternoon with one representative each from the city and Greektown. He indicated earlier today that he will err on the side of ruling to allow Greektown to assume the revised agreement that would allow the rollback, since it would maximize the property’s value in a sale.

Shapero is expected to make a final ruling this afternoon.

One thought on “Bankruptcy Judge Tours Greektown

  1. Mike Simpkin April 9, 2009 / 7:42 pm

    Hi Matt:
    What was the decision on the tax rollback for Greektown casino?

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