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The committee of unsecured creditors -- MFS Investment Management, Panton Capital Group an Babson Capital Management LC -- filed a motion this week accusing the buyers of being on both sides during the negotiations and saying that Green Valley Ranch creditors should get more than $500 million.
In a 22-page filing with the U.S. Bankruptcy Court in Reno, attorneys representing Green Valley Ranch said three second-lien, unsecured lenders are contractually prohibited from challenging the deal.
That's because first-lien lenders hold approximately 61 percent of the second-lien debt, Station Casinos' law firm, Kirkland & Ellis LLP, said in court papers filed Wednesday.
"Yet three second-lien lenders wish to engage in a classic strategy -- played out in front of this and other bankruptcy courts countless times before -- to raise doubts about the Green Valley Ranch sale and create hold-up value, in the hopes of receiving a payoff," the property's attorneys said.
Their filing said the sale process resulted in first-lien lenders almost unanimously consenting to receive $106 million less than full payment on their debt.
In all, about $378 million in debt would be extinguished if federal bankruptcy Judge Gregg Zive were to approve the sale.
"Because the general unsecured creditors are $378 million out of the money, there will be no value to them unless the committee can show that the independent sales process undervalued the estate by approximately 70 percent," the motion said.
Attorneys for Green Valley Ranch said the unsecured creditors' committee "does not have a single member that holds an unsecured claim."
Station Casinos LLC, the company formed to buy most of the assets of bankrupt Station Casinos Inc., reached a deal in March with creditors that would allow the property to remain part of the casino company's Las Vegas holdings.
The 496-room resort, which was developed by affiliates of Station Casinos and the Greenspun Corp, opened in December 2001.
Attorneys for the unsecured creditor claim the $500 million sale price for Green Valley Ranch Resort is low, and undercut by "historical cash flows potentially depressed by wrongful acts of insiders."
The committee of unsecured creditors asked Zive to put off a May 25 hearing to approve the sale as part of the gaming company's prepackaged bankruptcy plan.
"As an initial matter, the auction appears to have been rigged to depress the perceived value of Green Valley Ranch," the committee's law firm, Brown Rudnick LLP, said in court papers filed May 9.
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