Here is a new student article, “Shooting Craps: How Denying Tribal Casinos Bankruptcy Relief Ensures that Everyone Loses and a New Rule to Provide Potential Chapter 11 Relief,” available on SSRN. It will be published in the Temple Law Review.
Here is the abstract:
In August 2012, the Bankruptcy Court for the Southern District of California dismissed a Chapter 11 petition filed by the Santa Ysabel Resort and Casino finding that the casino was an ineligible debtor under the Bankruptcy Code. This Essay critiques the decision of the Bankruptcy Court and suggests that tribal casinos should not be summarily excluded from filing for bankruptcy. This is because the federal Indian Gaming and Regulatory Act dictates the corporate form of Indian casinos but potentially excludes them as eligible debtors.
Instead, this Essay proposes a new rule that courts should use when evaluating Tribal Casinos as semi-sovereign entities in Chapter 11 proceedings. Ultimately, this rule would allow certain tribal casinos to avail themselves of bankruptcy protection while still complying with federal law.
From Gaming Industry Media (via Indianz):
The issue of casino bankruptcies in Indian country is tricky – and evolving. We turned to former National Indian Gaming Commissioner Tom Foley to analyze the situation. Foley, who works closely with Spectrum Gaming Group (publisher of this newsletter) and is a founding member of the PACE/Minnesota government relations firm, wrote this analysis with PACE partner Kevin Quigley and Bill Fisher of the Gray Plant Mooty law firm.
Over the last two decades Indian gaming has grown from a handful of modest-sized bingo facilities in a few states into a $26 billion industry with over 425 tribal gaming establishments operated by 230 tribes in 28 states, many such operations being large-scale casino destination resorts offering Class III gaming. Tribes and others (bondholders, bank syndicates, development/management companies) have leveraged significant investments to fuel this growth, betting heavily on the long-term success of the gaming projects.
In doing so, the question lurking in the minds of many investors (and seldom considered likely to need a definitive answer) has been: What happens if the bet goes bad? The recent credit freeze and recession has thrust this question to the forefront of the industry, particularly for creditors holding substantial Indian gaming debt. Like many issues involving the Indian gaming industry, the answer – and related issues – is yet to be discovered and is evolving with the law.
Commercial gaming debt restructurings are generally made against the backdrop of a well-defined and understood set of legal parameters (i.e. the U.S. Bankruptcy Code). But even here, there is some uncertainty as to the interplay of the bankruptcy laws and state gaming regulatory requirements.
Attempts to restructure tribal gaming debt will only add a number of other variables to the equation and impact several different interested parties (tribal operators, tribal members and casino employees, management companies, lenders/bondholders). Each of these will have a perspective about how the law should address tribal gaming debt restructurings that may, or may not, be consistent with the others.
Some of the questions that will need to be resolved include:
- Do U.S. bankruptcy laws apply to tribal gaming debt restructurings?
- What impact will tribal sovereignty and gaming laws have on restructuring attempts?
- How will the Indian Gaming Regulatory Act, and regulations adopted by the National Indian Gaming Commission interplay with “usual” debt work-out negotiations?