Mashantucket Pequot Nation

What Happens When a Tribal Business Goes Bankrupt?

Matthew 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

Matthew 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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Mashantucket Pequot Not Required to Disclose Financials to Conn. Town

Matthew L.M. Fletcher

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.

dct-order-on-motion-to-compel

Foxwoods Appeal Filed

Matthew L.M. Fletcher

Here is the appeal document.

Foxwoods to Challenge Union Vote

Matthew L.M. Fletcher

From the New London Day:

NLRB Set To Hear Challenge Of Foxwoods’ Union

Testimony starts Tuesday during Hartford hearing

It is a contentious battle, which pits an Indian tribe that operates one of the most successful casinos in the world against one of the largest unions in North America.

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Mashantucket Pequot Defense of Tribal Union Law

Matthew L.M. Fletcher

From the Connecticut Day:

Balancing The Rights Of Workers, Tribe

By Michael J. Thomas 

We know you have been following recent events here at Mashantucket involving union activity. We are writing to you so that you might understand the position of the tribal nation, and hopefully understand that just as you are concerned with the rights of our workers, so are we.

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Preliminary Results of Union Vote at Foxwoods

Matthew L.M. Fletcher

From The New London Day:

FOXWOODS DEALERS OK UNION

Casino Vows To Challenge 1,289-852 Vote

Mashantucket — Dealers voted in the United Auto Workers union at Foxwoods Resort Casino Saturday by a vote of 1,289 to 852, but the fight — tense for some, enthralling for others — isn’t over yet.

In a historic election expected to bring in organized labor for the first time at one of the world’s largest Indian-owned casinos, dealers cast a total of 2,177 ballots, but 36 were challenged by the union or the company and thrown out. The overall vote was 60 percent in favor of the UAW. The count overseen by the National Labor Relations Board was completed at about 2 a.m. this morning. A total of 2,640 dealers were initially eligible, said Foxwoods Spokesman Saverio Mancini, but 25 were disqualified before voting and another five ballots were filled out wrong and voided, and some just didn’t show up, he said. Despite the win by the UAW, Foxwoods President John O’Brien said this morning that the company and its owners, the Mashantucket Pequot tribe, would examine all their options, including a legal fight, before letting the UAW in the door.

“We are disappointed with the preliminary tally, however, these results will not be official until all legal issues, including jurisdiction, are resolved,” O’Brien in a statement. “We continue to believe as we have from the very beginning that the labor board lacked jurisdiction and that any election should have been governed by tribal laws. “We have made our position clear to the NLRB and will continue to do so in the future.”

Mashantucket Pequot Appeal to NLRB

Matthew L.M. Fletcher

From the New London Day: “The Mashantucket Pequot tribe asserted their sovereign right to adhere to tribal and not federal labor law in a 50-page request for review submitted Wednesday to the National Labor Relations Board in Washington, D.C.”Expanding arguments originally laid out in a legal brief filed with the regional NLRB in Hartford, attorneys with Kilpatrick Stockton LLP of Atlanta honed in on the particulars of that tribal labor law, adopted this past summer.”

We’ll be looking for the papers filed by MPN, but please let us know if you know where we can get it. Miigwetch.

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