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Gun Lake Band Casino Plans

September 3, 2009Matthew L.M. Fletcher3 Comments

From mlive via Pechanga.net:

Rendering courtesy Gun Lake TribeThe exterior of the new Gun Lake Casino in Wayland

After repeated roadblocks that delayed the Gun Lake Casino from becoming a reality, plans for construction of the project finally are in motion, albeit on a smaller scale initially.

“Everything’s a go,” said John Shagonaby, CEO of MBPI Inc., the economic development corporation of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians.

The federal government in August officially declared the casino site in Wayland a reservation, and a federal judge dismissed the final lawsuit to stop it.

A ground breaking is scheduled for 10 a.m. Sept. 17.

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ICT’s Bankruptcy Primer

September 1, 2009September 1, 2009Matthew L.M. Fletcher

From ICT (thanks to Jason):

By Jack Duran, Guest Columnist

I am likely breaking some sort of gaming taboo discussing the topic of bankruptcy, however, with the current state of the economy, struggling to recover from the collapse of the financial markets, the bankruptcy filings of the Trump, Tropicana, Fontainebleau casinos, and the recent bankruptcy filing of gaming powerhouse Station Casinos, a discussion of bankruptcy law seems timely.

The gaming industry, once thought of as “recession proof,” is showing cracks in its armor, as gaming revenues have fallen in local hubs, like Las Vegas and New Jersey, and in distant places like Macau. Indian gaming has not been unscathed; gaming revenues for Indian casinos, while presently stable, have experienced a reduction over the past couple of years, causing significant belt tightening in Indian country.

Causes of Casino Bankruptcies

The causes are as abundant as bad business decisions. Typically, a bankruptcy filing occurs when business expenses and other liabilities exceed cash flow or assets, and creditors come banging at the doors to demand collateral. In the gaming industry, it’s easy to exceed available cash flow. This can occur prior to a casino’s opening if construction or development costs unexpectedly escalate.

Similarly, it may arise after opening if an expansion project suddenly goes sideways. As most casinos are heavily leveraged at the outset, for obvious reasons, a number of causes, whether it be an economic downturn or poor marketing and management, can result in lower revenues and a redlined EBITDA.

Additionally, missing a single debt payment can trigger a loan agreement’s immediate repayment clause or, in certain cases, gaming license suitability issues. Either of these can result in a parade of financial repercussions. Finally, casino operators and management groups may also over-extend themselves by purchasing competitors or expanding gaming holdings in untapped domestic or foreign markets.

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Opening NIGC Appellate Brief in Carter Lake Casino Dispute

August 29, 2009Matthew L.M. Fletcher

Here is the NIGC brief in Nebraska ex rel. Bruner v. Dept. of Interior/NIGC — Federal – NIGC Appellant Brief

Lower court materials are here and here.

What Happens When a Tribal Business Goes Bankrupt?

August 28, 2009Matthew L.M. Fletcher1 Comment

Does federal bankruptcy law apply? Can a Section 17 corporation declare bankruptcy? What about tribal bankruptcy laws?

According to some gaming experts, the United States bankruptcy code does apply? Here’s a quote from a news article on the Pequot debt default question:

“From the perspective of creditors, it’s a unique situation,” said Megan Neuburger, an analyst for Fitch Ratings. “It’s murky, but the consensus of legal experts is that a traditional bankruptcy proceeding would not apply to a tribal government.”

Although no court has ruled on the matter, she said, a tribe that’s considered a sovereign nation would likely be deemed ineligible to apply for relief under the bankruptcy code, which specifically excludes “governmental units.”

If federal bankruptcy protection doesn’t apply to tribal governments, what happens then?

Comments appreciated.

Holy Cow! Foxwoods about to Default on $1B in Debt

August 26, 2009Matthew L.M. Fletcher

From the New London Day via Pechanga:

On the brink of default, the Mashantucket Pequots are seeking to restructure $2.3 billion worth of debt, a senior adviser to the tribe said in interviews this week.

The debt is $1 billion more than the tribe’s Foxwoods Resort Casino – North America’s largest casino and once the world’s most profitable – can sustain, the adviser said.

”We’ll be asking creditors to take a big haircut,” he said.

While restructuring the debt with Malaysian investors, bondholders and banks, the Mashantuckets would continue to operate Foxwoods and MGM Grand at Foxwoods “as usual,” according to a plan drafted by Miller Buckfire, an independent New York investment bank.

”Restructuring will have no impact on operations,” reads the plan, a copy of which the senior adviser provided to The Day. The adviser discussed the tribe’s fiscal crisis on the condition of anonymity, offering a rare look at the Mashantuckets’ finances.

The tribe is at risk of defaulting Monday on the terms of a $700 million line of credit with a syndicate of banks, the adviser said.

”Our goal is to reduce debt,” he said. “My feeling is that further reductions (in the casinos’ work force) would be counterproductive to the quality of the business.”

The tribe, grappling with the recession’s devastating effect on the gaming industry, laid off hundreds of casino employees in 2008, and also trimmed the size of its government and cut benefits for tribal members, including their monthly “incentive” payments.

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What’s Going on With Tribal Sovereign Immunity?

August 24, 2009Matthew L.M. Fletcher5 Comments

Since we started this blog in fall 2007, there have been a plethora of tribal sovereign immunity federal and state court decisions. Most of them are routine — slips and falls, internal tribal disputes — but a handful of these cases are worth watching because of the subject matter and the general uniqueness of the problem.

Oklahoma gaming compacts — the Oklahoma Supreme Court has been interpreting the Class III Oklahoma gaming compacts as virtual waivers of immunity, in almost comically formalistic ways. These compacts, passed by the state’s voters, are a take-it-or-leave-it prospect for tribes. They allow for suits against the tribes in a court of “competent jurisdiction,” which the Oklahoma court has interpreted to mean state courts. Opinions here and here.

Dram Shop Actions — Again, these would not be unusual except the Oklahoma Supreme Court has found a waiver of immunity in state courts for dram shop actions. That case, Bittle v. Bahe, conflicts with the decisions of several other courts (discussion here).

Bivens Actions against tribal cops — A federal common law cause of action against tribal officers gained ground in federal district court, but didn’t get so far in the circuits (here and here).

Section 1983 claims against tribal cops — Did gain ground (here).

Payday loan operations — Currently up for review in the Colorado Supreme Court are franchises owned by two tribes doing business as payday loan operators and attempting to avoid state process and investigation (here). A related California case is here.

Tribal fee lands — A Washington court held that it continues to have in rem jurisdiction over tribally-owned fee lands (here).

Cherokee Freedmen case — the D.C. Circuit allowed the Vann lawsuit to proceed against tribal officials under the Ex parte Young theory, but more or less vacated the district court’s theory that the 13th Amendment somehow abrogated tribal sovereign immunity.

Suit against Gun Lake Trust Acquisition Dismissed

August 21, 2009Matthew L.M. Fletcher4 Comments

Here is the news report.

And the materials:

DCT Order Dismissing Patchak Claims

Gun Lake Band Motion to Dismiss

US Motion to Dismiss Patchak Claims

Colusa Case Reaches Judgment

August 20, 2009Matthew L.M. Fletcher1 Comment

From a Picayune Rancheria press release:

Sacramento – In a decision with wide-ranging ramifications for California’s budget woes, the Honorable Frank C. Damrell, Jr., Judge of the United States District Court for the Eastern District of California, entered final judgment today that Indian tribes conducting gaming in California are entitled to an additional 10,549 slot machines under their compacts with the state. Chukchansi Tribal Chair, Morris Reid stated, “This will allow the 1999 Compacted Indian tribes to provide an additional $30 million to the state of California. We are thankful the state will now have millions more to pay for programs and the tribes will be able to provide better support for their members.” The tribes were denied these gaming devices for a decade due to the state’s miscalculation of formulas under the compacts. The decision orders the State of California to undertake a draw within 45 days to assign the gaming devices to the various tribes gaming in California.

Morris Reid, Tribal Chair of plaintiff Picayune Rancheria of Chukchansi Indians, commented that, “The State and tribes lost millions of dollars the past decade that they can never get back due to the state’s miscalculation of the number of gaming machines available under the compacts, but the federal court’s decision wisely corrects this going forward. This is a great win for all of Indian Country.”

LTBB Credit Rating Dips

August 19, 2009August 19, 2009Matthew L.M. Fletcher

From the Petoskey News-Review (H/T Junior; also Indianz):

Standard & Poor’s — an independent global provider of credit ratings — has reduced the Little Traverse Bay Bands of Odawa Indians’ credit rating twice in one week.

Following the tribe’s Aug. 11 announcement that it was attempting to re-negotiate the payment of its $122 million in senior unsecured notes — which were originally issued in 2006 to support the construction of the Odawa Casino Resort — and would therefore be suspending its $6.3 million in interest payments due Aug. 17 to its holders; Standard & Poor’s issued a statement Aug. 12, that it would immediately reduce the tribe’s credit rating from ‘CCC’ to ‘CC’ with a negative outlook.

According to Standard & Poor’s credit rating definitions, available on their Web site — www.standardandpoors.com— a ‘CCC’ credit rating means that a company is currently vulnerable, and ‘CC’ means the company is highly vulnerable.

In its Aug. 12 release, Standard & Poor’s also stated that once the tribe missed its interest payment on Monday, Aug. 17, that its credit rating would be reduced to ‘D,’ which means the company has failed to pay one or more of its financial obligations, and that the global credit-rating provider believes the tribe will fail to pay all, or substantially all of its obligations as they come due.

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