In a filing with the Securities & Exchange Commission, American Wagering, better known within the Las Vegas community as Leroy’s, reported on a legal problem that developed when it attempted to change the payment schedule it had agreed to in settling a lawsuit some five years ago.
Known as the Racusin lawsuit which it lost, American Wagering was on the hook for a large settlement and had agreed to a system of payment. Last year, the company filed a Corrected Amortization Schedule that Racusin termed a breach of the original agreement.
During a hearing on a Motion for Summary Judgment filed by Racusin, the court stated its intention to rule in favor of Racusin.
"It is expected that the court will enter its order in approximately 30 to 60 days," said American Wagering in its SEC filing.
"If the company is unable to negotiate a settlement with Racusin and the court enters a judgment in favor of Racusin, the company’s obligations to Racusin under the Settlement Agreement, including pre-judgment interest, would be accelerated and, therefore, would be immediately due and payable," the company noted.
Because of the current economic crunch and the problem in raising funds, the company said, it may be difficult to raise any capital on acceptable terms.
In the event the company cannot raise additional capital, the company said, it may be unable to meet its financial obligations.