Sometimes it makes you wonder what these companies are really up to. If this works they way they are thinking, does that mean more of this same thing coming from others? I guess time will tell.
According to the Chicago Tribune and the Associated Press, this is what they are doing.
Majestic Star Casino LLC, owner of two casinos in Gary, has filed for bankruptcy protection after defaulting on its debt obligations.
The Las Vegas-based company, which also has casinos in Colorado and Mississippi, made its Chapter 11 bankruptcy filing Monday in Delaware.
Company chairman and Detroit-based businessman Don Barden blamed its financial troubles on the recession and increased competition. He said operations would continue as usual at the casinos and hotel along Lake Michigan, as well as at operations in Tunica County, Miss and Black Hawk, Colo.
Despite the filing, “the company is in a strong cash position and we don’t need DIP financing or anything like that,” Barden said referring to debtor-in-possession financing, a type of post-bankruptcy credit often needed for a financial restructuring.
Last month, Majestic Star defaulted on $79 million in long-term debt, which it has been trying to restructure with its lenders. But those negotiations fell through, hence the Chapter 11 filing. “It’s the best and fastest way to restructure the company,” Barden said.
Majestic Star said it ended June with nearly $750 million in liabilities and about $406 million in assets.
In a bankruptcy filing, Majestic Star listed its largest creditors as Lehman Brothers Inc., Goldman Sachs & Co. and Bank of New York Mellon Corp., which, respectively, have claims of $46.3 million, 38.5 million and $34.1 million.
The city of Gary is Majestic Star’s 10th largest creditor, with a “disputed” claim of $7.4 million, according to the bankruptcy filing. The city and the casino company have been in a dispute over Majestic Star’s development agreement.