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Senior lenders of Station Casinos Inc requested the Nevada Bankruptcy Court to investigate the company’s executives and key backer Deutsche Bank, alleging that they may be using the bankruptcy process for their own benefit at the lender’s expense.
A leveraged buyout by the founding Fertitta family and investment from Colony Capital took Station Casinos private in 2007. The company filed for bankruptcy protection in July, to restructure $5.7 billion in debt, with approval from a board comprised mainly of Fertitta and Colony representatives.
The gaming company had reorganized their capital structure into three separate but related “stacks” secured by gambling operations, property and land owned by Station.
The group of lenders comprised of 10 banks and investment firms including General Electric Capital Corp., U.S. Bank and BNP Paribas S.A. exclusively invested in a $900 million stack secured by gaming operations.
The independent lenders hold approximately 30% of the senior secured debt.
The lenders told the court that the three stack debt structure no longer works, as each stack is insolvent and management can move value among different stacks, each with a different set of creditors with conflicting interests.
Station Casinos responded by asking the courts to deny the lenders’ request.
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