From FREEP:
The Detroit City Council voted 6-2 Tuesday to reject a $15.3-million settlement for the city that would have transferred ownership of Greektown Casino to a new company after the casino emerges from bankruptcy.
The vote came after a group of local investors, including former Highland Park Emergency Financial Manager Arthur Blackwell, made its case to the council that the investors deserve some form of payment in the bankruptcy.
“I’ve never heard of a deal where the casino has never lost a dime” being in bankruptcy, said Blackwell, an investor who sold most of his stake in Greektown to casino mogul Don Barden, but retains $5 million in Greektown options. “By voting ‘No’ … we’ve got hope for something.”
But Mayor Dave Bing said he will ask the council to reconsider its vote.
In a statement, Bing decried the vote as “an attempt to force the Greektown bankruptcy court to make payments to a small group of casino investors” that violates U.S. bankruptcy rules.
He also admonished the council to “not squander $8 million.”
The settlement was reached last week between the debtors’ attorneys and the City of Detroit, but required City Council approval.
The agreement would give the city a $15.3-million payoff and free the casino to seek a 5% tax rollback from state regulators. The $8 million is a net amount that would be received from the total $15.3-million settlement.
Of that payoff, $3.5 million would be paid to the city within two days after the judge in Greektown’s Chapter 11 proceeding enters the confirmation order to approve its exit plan. The rest would come after a dozen other matters are settled, including the completion of a revised development agreement, according to the settlement filed with the bankruptcy court. The original development agreement required, among other things, that the casino build a hotel and hire a certain percentage of Detroiters.
“We have significant sympathy for the group,” Cid Froelich, an attorney who negotiated on the city’s behalf, told the council Tuesday. “This is the handcuffs put on us by the bankruptcy. … They can’t end up with a piece when no one above them does.”
Chuck Moore, the turnaround expert for the casino’s estate, said: “We look forward to working with the City Council to provide whatever information they need to hopefully reconsider.”
The council has until Oct. 29 to reconsider its vote.
Turtle Talk 