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Gaming Guru

Jeff Simpson
 

Castaway Employees Get Help

2 February 2004

LAS VEGAS -- When the 49-year-old Castaways closed Thursday afternoon after a couple of years of bleeding investors' and creditors' money, its 800 or so workers faced the loss of their incomes and daily routines.

But the same coalition of groups that helped Binion's Horseshoe workers find work and file for benefits has already begun pointing the Castaways employees toward assistance.

Union and nonunion Castaways workers used computers set up at Culinary Local 226 headquarters to apply for unemployment on Friday, and will be able to continue doing so next week.

The union, along with the U.S. Department of Labor, Nevada Partners and the Culinary Training Academy have teamed up to offer one-stop assistance at Nevada Partners' North Las Vegas job skills center, beginning Tuesday.

"It's a tragedy, it's horrific," Culinary Secretary-Treasurer D. Taylor said. "This closing is unprecedented in how it was done, just like Binion's was earlier this month."

Taylor said workers were caught by surprise when a team of suits, acting under an order from U.S. Bankruptcy Court, showed up shortly after 3 p.m. Thursday and said they were closing the hotel and casino to collect collateral backing a mortgage loan.

"They knew the property was in tough shape, but you're just not prepared for it to end like that," Taylor said.

Castaways owner VSS Enterprises, which bought the former Showboat from Harrah's Entertainment for $23.5 million in March 2000, filed for bankruptcy in June, listing debts totaling $50 million.

Las Vegas-based Vestin Mortgage is owed $8.8 million as part of a $22 million mortgage-backed loan.

Vestin spokesman Steve Stern on Thursday said the mortgage company decided to exercise its rights to collect on its debts because the Castaways owners were not maintaining the "required amount of collateral, they wrote checks to vendors in excess of their money in the bank, and they improperly allowed post-(bankruptcy) filing debt to accumulate."

The Culinary plans a general meeting for Castaways workers at the union hall at 4 p.m. Wednesday, Taylor said.

About 350 to 400 Culinary workers had jobs at the Castaways, along with another couple of dozen members of other unions, Taylor estimated.

The union plans to appear in U.S. Bankruptcy Court on behalf of Castaways workers to make sure its workers get paid any money due them, he said.

Castaways lawyer Sal Gugino said the property's end wasn't what the owners had in mind when they bought it almost four years ago.

"I feel management did everything it could to keep the doors open, but circumstances and overwhelming expenses were too much," Gugino said.

Taylor said union officials aren't telling the property's employees to expect the Castaways to reopen, and he agreed with industry experts who say the hotel site is no longer a great locals casino location.

That, he said, not the cost of the Castaways' union contracts, is what drove the property out of business and toward a likely foreclosure sale next week.

"Locals have quit going to core city properties and instead go to neighborhood places that are nonunion," Taylor said. "We have to organize them."

In the meantime, the local's top official said he's optimistic the Castaways workers will be able to find jobs at other Las Vegas union properties.

In addition to leaving about 800 workers unemployed, the Castaways' closure Thursday afternoon left scores of Super Bowl weekend visitors out on the streets.

The hotel-casino was referring guests who had planned to stay there this weekend or in the future to either Arizona Charlie's East at 4575 S. Boulder Highway at 951-9000 or hotel reservation company Las Vegas Travel at 739-1482.

Bowlers slated to compete in the Columbia 300 Amateur Classic at the Castaways this weekend were advised on the tournament's Web site that entry fees have been, or will be, refunded.