NPR on Mashantucket Pequot Labor Deal

From NPR:

American Indian casinos are big business in the United States, with an estimated 280,000 people employed across more than 400 sites.

That huge workforce is largely unorganized. Only a few such casinos recognize union contracts. Among them is North America’s largest gaming center, Foxwoods Resort Casino in Connecticut.

Its dealers recently struck a deal after a lengthy dispute with the Mashantucket Pequot Tribe. What makes this agreement different is that it was brokered under tribal law.

Unionizing Casinos

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Banishments at Mashantucket Pequot

From local news:

In banishing Christopher Pearson, the former tribal official facing sentencing on federal wire-fraud charges, the Mashantucket Pequot Tribal Elders Council meted out an ancient form of punishment employed by Indian tribes across the country.

Within weeks of his Nov. 19 conviction in U.S. District Court in Hartford, Pearson was ordered off the Mashantucket reservation, where he owns a home, and to surrender his tribal badge, having “forfeited all rights and privileges of Tribal membership with the exception of services provided by Tribal Health Services.”

The elders council also directed the tribe’s finance department to cut off Pearson’s monthly “incentive” payments — the distributions of Foxwoods Resort Casino revenue that all tribal members in good standing receive.

While the tribe would provide no information about banishments, it’s believed that their frequency has increased since the tribe’s constitution and by-laws granted the elders council “the authority and responsibility” to impose them.

Mashantucket Pequot Tribal Council resolutions show that 12 people were banished by the tribal council prior to the establishment of the elders council in 1996. Currently, several people are banished each year, maybe more, according to Thomas Weissmuller, chief judge of the Mashantucket Pequot Tribal Court. Continue reading

Foxwoods Debt News

From the Hartford Courant:

The deeply indebted owners of Foxwoods Resort Casino said Monday that they have reached a deal with creditors that appears to offer some temporary relief.

The Mashantucket Pequot Tribal Council issued a statement saying that it “has entered into a forbearance agreement with its senior lenders” that extends through Jan. 20.

The Tribe did not say how much debt the forbearance applies to or offer any other terms, and said it would not comment further until discussions with creditors are finished.

The tribe, which does not publicly disclose its finances, has reportedly been trying to renegotiate more than $2.3 billion of debt, a situation that has led credit rating agencies to downgrade the tribe’s creditworthiness.

In its statement, the tribe said it “remains committed to working with its lenders to reach consensual resolutions.”

Last month the Pequots placed Michael Thomas, Chair of the Tribal Council, on administrative leave “pending the outcome of an internal review.” Citing a memo from the six other council members to Thomas, The New London Day has reported the council ousted Thomas because he issued a letter Aug. 19 to the tribal membership in which he described his own plan and stated his own opinions about the financial crisis.

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Mohegan Tribe Per Caps under Scrutiny by Lenders

From the Day:

Times were flush when the Mohegans sought the U.S. Bureau of Indian Affairs’ approval of the tribe’s plan for distributing gaming revenues.

After ensuring that the plan provided adequate funding for tribal government and economic development, among other things, the deputy commissioner of Indian Affairs signed off on the plan on July 16, 2001. It calls for 40 to 50 percent of the tribe’s net gaming revenues from Mohegan Sun to be distributed to the tribe’s adult members on a quarterly basis.

More recently, on Jan. 4, 2008, the office of the secretary of the Department of the Interior approved a Gaming Revenue Allocation Plan submitted by the Mashantucket Pequots. Under the plan, up to 30 percent of the net gaming revenues generated by Foxwoods Resort Casino (including MGM Grand at Foxwoods, which opened in May 2008) are to be distributed to tribal adults “to help advance their personal health, safety and welfare.”

The plans, which the BIA requires of tribes that choose to make so-called per capita payments to members, have come under scrutiny in recent weeks, particularly in the case of the Mashantucket Pequots, who are seeking to restructure a debt load of more than $2 billion. Gaming industry analysts and the Mashantuckets’ creditors are more interested than ever in how the tribe distributes its gaming revenue.

The creditors were alarmed in late August when Mashantucket Chairman Michael Thomas, addressing tribal members about the “dire financial times” facing the tribe, vowed to protect funding for tribal government and per capita “incentive” payments from further cuts. The pledge, which many within and without Indian Country considered irresponsible, cost Thomas his chairmanship. Placed on administrative leave and facing a tribal council vote to expel him from the council, Thomas announced he would not seek re-election Nov. 1.
“He’s not that relevant at the moment,” Jane Pedreira, a gaming analyst with Rye, N.Y.-based Clear Sights Research, said last week.

With Thomas out of the picture, the investment world is keen to learn about the tribe’s funding of its tribal operations and the payouts its members receive. If they’re having trouble finding such information, “it’s not for our lack of looking,” one investor said.

Plans’ percentage breakdowns

Copies of the revenue-allocation plans, which The Day obtained from the BIA through a federal Freedom of Information Act request, detail the percentage breakdown of the tribes’ allocation of their net gaming revenues. The Mohegans’ 10-page plan specifies that 30 to 40 percent of the tribe’s revenue is to be dedicated to tribal-government operations and programs, including investments and education; 5 to 15 percent to the general welfare of tribal members, including investments, health, housing, social services and youth services programs; and 10 to 20 percent to economic development, both gaming and non-gaming related. Continue reading

Mashantucket Pequot Debt Restructuring Affects All Indian Gaming Operations

From Gambling Compliance (via Pechanga):
Any reassurance by the Mashantucket Pequot Gaming Authority that it will honour its debt obligations could lend much needed legitimacy across the tribal gaming sector and would set a good example for other indebted tribal gaming operators, according to analysts at rating agency Moody’s.

The Mashantucket Pequot’s decision in late August to hire a financial advisor heightened fears that the operator behind the Foxwood’s Casino in Connecticut might be considering a default on its $1.5bn debt load. The move saw both Moody’s and Standard & Poor’s downgrade the tribe’s rating by three notches.

Keith Foley, senior vice president of debt research at Moody’s, said it was the lack of information from the tribe about its actions that was the main cause for the “pretty severe” downgrade.

“The two primary reasons for that were, one, the announcement was very brief which raised a lot of uncertainty in terms of what the options are or what they were thinking. In addition, the statement that they hired a financial advisor, particularly given some of the challenges in the Connecticut gaming market, suggested to us that there is always the possibility that an option could be chosen that could lead to some impairment to creditors.”

However, Foley was keen to stress that a “favourable outcome” might still be possible, and that this could have positive ramifications far beyond the confines of the Mashantucket’s own debt dilemma. “One of the things I would like to point out is that a key implication from this could be that if the Mashantucket tribe truly demonstrates that it is taking every possible step to honour its debt service obligations and they maintain strong corporate governance standards, it could set a very good example for other tribes and increase the legitimacy of lending to the Native American sector in general.”

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Foxwoods Settles $2.9 Million Personal Injury Claim

From ICT:

LEDYARD, Conn. – A Massachusetts man who lost his leg in an accident at Foxwoods Resort Casino in 2006 received a $2.9 million award in what may be the largest personal injury claim ever negotiated in a tribal court.

Richard Murch, 69, of Tewksbury, Mass., and the Mashantucket Pequot Gaming Enterprise agreed to settle the claim minutes before a trial was to begin in Mashantucket Pequot Tribal Court in early August.

MPGE is the business arm of the Mashantucket Pequot Tribal Nation, which owns Foxwoods Resort Casino in southeastern Connecticut. Tribal officials said it was their largest settlement.

New London attorney M. John Strafaci, who represented Murch, said it may be the largest settlement in any tribal court.

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What Happens When a Tribal Business Goes Bankrupt?

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

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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Mashantucket Pequot Not Required to Disclose Financials to Conn. Town

In an ongoing case where the Mashantucket Pequot Nation is seeking relief from local taxation of slot machines leased by the tribe from non-Indians, the district court rejected the Town of Ledyard’s motion to compel discovery of the Nation’s entire financial records.