In re Greektown Holdings LLC

Reorganized Greektown Casino Investors Respond to Stupak

Matthew L.M. Fletcher

From the Freep via Pechanga:

WASHINGTON – A week after U.S. Rep. Bart Stupak asked the federal Interior and Justice departments to put the brakes on the bankruptcy reorganization of Greektown Casino, a lawyer for the investors set to take control from the Sault Ste. Marie Tribe of Chippewa Indians, said Stupak’s claims on behalf of the tribe should not be allowed to slow the process.

Allan Brilliant, a New York lawyer representing a group of private equity and hedge funds which will take ownership of the Detroit casino, said in his letter Tuesday that U.S. Attorney General Eric Holder and Interior Secretary Ken Salazar should “disregard” Stupak’s request to look into the reorganization, saying the tribe’s “last-minute, baseless attempt to delay such exit (from bankruptcy) is detrimental to all parties that benefit from the revenues generated by the facility.”

Last week, Stupak – a Democrat from Menominee on the Upper Peninsula, where the Sault tribe is based – said Holder and Salazar should look into whether land held in trust by the federal government on behalf of a tribe can be handed over to investors without an act of Congress.

He said some of the land on Beaubien Street in Detroit where Greektown Casino is located was given to the federal government on the tribe’s behalf by private investors.

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Sault Tribe Enlisted Stupak to Pressure Justice and Interior on Greektown Parcel

Matthew L.M. Fletcher

From the Soo Evening News:

The Sault Tribe of Chippewa Indians has gained a powerful ally in its bid to retain Greektown Casino as Congressman Bart Stupak (D-Menominee) has requested the U.S. Bankruptcy Court and the Michigan Gaming Control Board to postpone Chapter 11 reorganization.

In a three-page letter [20100609_GreektownCasino], Stupak urges the U.S. Department of the Interior and the U.S. Department of Justice to investigate if it is legally possible for the Sault Tribe to lose its real estate interest in Greektown Casino. Essentially, Stupak argued, that the 0.76 acre parcel located at 1010 Beaubien Street in the City of Detroit has been placed in federal trust and cannot be conveyed to another party without Congressional authorization.

“I seriously question the propriety and legality of a process in which the property conveyed to the United States in trust on behalf of the Tribe can be conveyed without authority from Congress and without full Tribal consent,” wrote Stupak, indicating it was his opinion that the parcel is owned by the federal government for the benefit and use of the Sault Ste. Marie Tribe of Chippewa Indians.

Stupak went on to write “that any further proceedings related to the reorganization of the Greektown Casino by the Michigan Gaming Control Board or other agencies be postponed” until a determination is made by federal authorities.
Stupak expressed his concerns regarding this matter following a meeting with Director D.J. Hoffman of the Sault Tribe Board of Directors last week.

“On June 4, 2010 myself, Director (Keith) Massaway and Chairman (Darwin “Joe”) McCoy met with Congressman Stupak to discuss Tribal issues, including Greektown,” said Hoffman. “I am extremely grateful that Congressman Stupak recognized the serious nature of this situation and immediately took action to call this issue into question.”
Chairman McCoy expressed similar sentiments.

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Stupak Throws Indian Law Monkey Wrench Into Greektown Bankruptcy

Matthew L.M. Fletcher1 Comment

Potentially, though perhaps not likely, this is a huge issue. Assuming that the Greektown parcel is owned by the Secretary of Interior on behalf of the Sault Tribe, then an Act of Congress may be required. And if one is not forthcoming, there may be some very interesting litigation involving the interaction of federal bankrupcty laws and maybe the Quiet Title Act. If the land is not in trust, then we may still have a Non-Intercourse Act problem, but likely not. Apparently, according to the letter, the land is in trust.

Update: Via Indianz, here is Stupak’s letter.

From the Freep, via Pechanga:

WASHINGTON — U.S. Rep Bart Stupak wants to halt the bankruptcy reorganization of Greektown Casino at least until the federal government determines whether an act of Congress is needed to transfer the land the Detroit gaming hall sits on.

Earlier this year, a federal bankruptcy judge approved a reorganization plan allowing Greektown Casino’s bondholders — including several private equity and hedge funds — to take ownership. The Sault Ste. Marie Tribe of Chippewa Indians, based on Michigan’s Upper Peninsula, has a majority ownership stake in the casino.

The process needs the approval of the Michigan Gaming Control Board, with a court deadline of June 30 approaching.

But Stupak, D-Menominee, has asked U.S. Attorney General Eric Holder and Interior Secretary Ken Salazar to delay any change in ownership while they investigate whether land held by the federal government on behalf of the tribe — about three-fourths of an acre on Beaubien Street in Detroit — can be transferred without an act of Congress.

“The tribe stands to lose its entire investment in the business, including a portion of the real property underlying the casino,” Stupak said in the letter written Wednesday.

According to Stupak, 400 Monroe Associates — controlled by Greektown businessman Ted Gatzaros — deeded the land to the U.S. Department of Interior on behalf of the tribe in 1992.

Tribally owned lands cannot be sold without the consent of the federal government, and the Interior Department is not allowed to approve the sale of such land without direct congressional authorization, Stupak said.

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Bankruptcy Court Order Confirming Greektown Reorganization Plan

Matthew L.M. Fletcher

Here: Greektown Order.

Greektown Reorganization Plan Approved; Sault Tribe Out

Matthew L.M. Fletcher

From the Detroit News:

A plan approved Friday to lead Greektown Casino out of bankruptcy protection will repay most creditors and strip ownership from the Sault Ste. Marie Tribe of Chippewa Indians.

Judge Walter Shapero of the U.S. Bankruptcy Court in Detroit confirmed the plan, pending state and city approvals on other issues that must be obtained by June 30. The plan, the third proposal since Greektown filed for Chapter 11 bankruptcy protection in May 2008, was approved by creditors last week.

“Greektown Casino is now approaching the finish line for its exit from bankruptcy,” said Charles Moore, the casino’s lead restructuring adviser with Conway MacKenzie Inc. in Birmingham.

Second Greektown Reorganization Plan to Be Considered

Matthew L.M. Fletcher

From the Freep via Pechanga:

A second plan to speed Greektown Casino’s exit from bankruptcy protection could go out to creditors for a vote next week.

U.S. Bankruptcy Court Judge Walter Shapero told lawyers for the casino and its creditors Friday that he expected to sign an order Monday to approve the disclosure statement. That would clear the way for the plan to be sent out next Friday for creditor voting.

The confirmation hearing is scheduled for Jan. 12. The goal is for plan confirmation by Jan. 31 and for the casino to emerge from bankruptcy by June 30.

Greektown Casino still needs to get the City of Detroit’s approval before it can approach state regulators for a 15% tax rollback.

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Greektown Reorganization Agreement Reached

Matthew L.M. Fletcher

Here is the reorganization plan referenced in the article below — Greektown Reorganization Plan

From Fox Business via Pechanga:

Greektown Holdings, L.L.C. announced today that beneficial holders of a majority of the principal amount of its pre-petition bank debt have reached agreement to support the plan of reorganization filed on November 2, 2009 by plan sponsors MFC Global Investment Management, OppenheimerFunds, Inc., Brigade Capital Management and Solus Alternative Asset Management LP. That agreement has been supplemented by a stipulation adopted by the Bankruptcy Court on November 19, 2009 among the Debtors, the plan sponsors, an ad hoc group of certain of the Debtors’ pre-petition bank lenders, the indenture trustee for the holders of the Debtors’ 10.75% Senior Unsecured Notes due 2013, the administrative agent for the Debtors’ pre-petition bank debt and DIP Debt and the official committee for the Debtors’ unsecured creditors.

Under the plan which will be amended pursuant to the stipulation, the pre-petition bank lenders would be paid in cash in full on the effective date of the plan, and the holders of the Debtors’ 10.75% Senior Unsecured Notes due 2013 will receive the equity of the reorganized Debtors, subject to dilution by the rights offering provided for in the plan. The holders of the Senior Unsecured Notes would also have the right to subscribe for approximately 78% of the equity at an aggregate purchase price of $185 million in the rights offering. The four plan sponsors have agreed to purchase any equity in such rights offering that is not subscribed for by the holders of the Senior Unsecured Notes in the rights offering. In addition, Solus Alternative Asset Management LP would make a direct investment in the equity of the reorganized Debtors.

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Greektown Hearings to Begin

Matthew L.M. Fletcher

From the Freep:

U.S. Bankruptcy Judge Walter Shapero has scheduled four days of hearing time during which the plan’s proponents and objectors are to call more than 20 witnesses and present 539 exhibits to prove their cases, according to a procedural order filed with the court.

At dispute is how Greektown Casino, the smallest by revenue of Detroit’s three casinos, was valued. The higher the value, the more creditors have to share. As it stands now, the pre-petition lenders, led by Merrill Lynch Capital Corp., put the value at $540 million and would own the casino after it emerges from bankruptcy.

Negotiations were ongoing over the weekend to deal with a potential wrinkle after the attorney for one creditor said he might offer a competing plan for reorganization. This plan would ensure bondholders, owed about $185 million, would get something out of the process.

“All of the parties continue to negotiate,” said Chuck Moore, a turnaround expert for the casino’s estate. “At this point, there is no plan other than to move forward with the confirmation hearings.”

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Detroit City Council Rejects Greektown Bankruptcy Deal

Matthew L.M. Fletcher

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.

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Majority of Creditors Approve of Greektown Casino Reorganization

Matthew L.M. Fletcher

From the Freep:

Greektown Casino said Tuesday its plan of reorganization was supported by a majority of creditors, paving the way for it to emerge from bankruptcy after confirmation hearings next month.

Charles Moore, a turnaround expert for the casino’s estate, told the Michigan Gaming Control Board on Tuesday that 80.6% of pre-petition lenders representing $220.7 million in claims voted to accept the casino’s plan.

Voting results on the alternative plan offered by Luna Greektown LLC and Plainfield Asset Management LLC were not available Tuesday.

Creditors representing much smaller amounts owed voted overwhelmingly to reject the Greektown reorganization plan, according to a filing Tuesday with the U.S. Bankruptcy Court in Detroit. Confirmation hearings on the plan are to begin Nov. 3 and are expected to last four days.

The pre-petition lenders will receive equity in the new casino and be the new owners, Moore told state regulators. Fine Point Group would continue to manage the casino, he said.

The board also was told of a settlement between the City of Detroit and Greektown Casino that would give the city a $15.3-million payment and free the casino to seek a 5% tax rollback from state regulators.

Moore said that Greektown would approach the board at its next meeting Nov. 10 for approval. That would give the casino time during confirmation hearings the prior week to receive court approval for the rollback first.

The casino, under Chapter 11 bankruptcy protection, would reduce its annual city and state taxes by $15 million with the rollback.

The city had argued that Greektown Casino was not eligible for the tax break already extended to MotorCity Casino and MGM Grand Detroit casino because it violated its development agreement.

The casino, which opened its hotel in February, had argued that it met the requirements for its permanent facility then.

Moore also told the state gaming board that Greektown’s goal is to emerge from bankruptcy by Dec. 31.