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Gaming Guru

Arnold M. Knightly
 

Lake Las Vegas owners inheriting fiscal liability

15 January 2008

LAS VEGAS, Nevada -- The new owners of Lake Las Vegas have a fresh set of challenges -- millions of dollars at stake in a series of lawsuits and unpaid bills left behind.

Atalon Group Chief Executive Officer Frederick Chin said he knew of the outstanding liabilities before the debt-restructuring company took over the struggling development from Transcontinental Corp.

"We're diligently working with creditors to resolve these issues," Chin said through a spokeswoman. "This reflects the challenges that came with taking over the company."

Although Atalon would not divulge how much is due in unpaid bills, the owners have expressed concern that the known bills could be just the "tip of the iceberg," someone familiar with the situation said.

Atalon, a holding company for a group of creditors led by Credit Suisse, acquired Transcontinental's Lake Las Vegas assets Jan. 2 after the development company defaulted on a $540 million loan.

Terry Coffing, a real estate litigation attorney for the law firm Marquis & Aurbach, said that with takeovers, as opposed to buyouts, it is common for creditors to come forward that new owners didn't know about.

"In this situation, it doesn't surprise me that there is lots of issues they're inheriting that they didn't know about," Coffing said. "That's why they're there."

The acquisition includes 400 acres of undeveloped land, three golf courses, a fourth golf course under development, a few businesses and an interest in the Ritz-Carlton. The properties are in Henderson, 17 miles from the Strip.

Lake Las Vegas, Transcontinental and subsidiaries attached to the development were sued by a range of businesses from a high-end real estate developer to an advertising firm apparently left with a half-million dollars in unpaid bills.

However, representatives for two lawsuits filed last year in Clark County District Court were hesitant to discuss their situations, although they hope Atalon will honor the debt.

"For now, we have decided to refrain from commenting beyond what we said in the legal complaint we filed," said George McCabe, public relations director for litigant B&P Advertising. "We remain hopeful that we will receive the money Lake Las Vegas owes B&P."

Las Vegas-based B&P, formerly Brown & Partners, sued Transcontinental on Nov. 11 for nearly $556,806 in unpaid bills for advertising services promoting parts of the 3,592-acre development.

Transcontinental, named as the lead defendant in the lawsuit, filed a motion to dismiss Jan. 10. The case is scheduled to be heard Feb. 12.

Other actions include a breach-of-contract lawsuit brought by Fountainhead Partners, a developer that bought about 23 acres of undeveloped land for $44 million in late 2005, and a construction defect lawsuit by a homeowners association.

Transcontinental is based in Arizona, but Atalon wouldn't say whether there are lawsuits in other jurisdictions.

"Maybe it's early, maybe it's an aberration," Coffing said. "But it doesn't sound like it. They wouldn't be this far along if it (were) an aberration."