Action could just be tip of the iceberg
The feared epidemic of bankruptcy filings by Nevada gaming operators has already begun, even though it’s still only the first quarter of 2009.
Las Vegas-based Herbst Gaming (the Herbst brothers pictured at right) filed a Chapter 11 bankruptcy reorganization plan on Monday, while Progressive Gaming filed for chapter 7 bankruptcy last week.
The Herbst plan indicates the company will lose ownership of its 15 casinos in Nevada, Iowa and Missouri, but will retain control of its Nevada slot machine route, which is mostly in Herbst gas stations and convenience stores.
Company executives say they had a previously negotiated agreement with a majority of their secured lenders covering $847 million in total debt.
They say the Chapter 11 process would allow normal operations at the company’s casinos and its slot machine routes to continue.
A local newspaper reports that the current management team will remain in place, employees will receive pay and suppliers will be paid on a regular basis.
The filing was made in the U.S. Bankruptcy Court in Reno.
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Progressive Gaming International Corp, a Nevada provider of technology products for the casino industry, filed for Chapter 7 bankruptcy, as the gaming industry continues to suffer from slower business during the recession.
The company formerly known as Mikohn Gaming, already sold most of its assets to IGT in January. The "fire sale" occurred after the company failed to repay debt obligations toward a major lender.
Progressive Gaming listed assets of $263,600 and debts of $5.6 million, according to court documents filed in a federal bankruptcy court in Nevada.
Its products include table game automation and display systems for in-casino advertising, as well as branded slot machines.
According to its most recent quarterly earning report, Progressive had losses of $63.6 million for the three months ended Sept. 30, 2008, on revenues of $13.7 million, down from a loss of $39.7 million on revenues of $18.3 million in the year earlier period.
James Lisowski was appointed trustee on Monday.
The filings could be part of a rash of bankruptcy proceedings. Station Casinos reported last week that it plans to file for Chapter 11 reorganization by April 15. Seeking protection could be the result of a lawsuit filed by an individual bondholder who has challenged Station’s offer to swap out debt and their prepackaged bankruptcy proposal.