Fontainebleau set for July court date

Jun 20, 2009 2:53 AM
by GT Staff | The stalled Fontainebleau project in Las Vegas learned Wednesday its lawsuit against its bankers will be expedited in federal bankruptcy court, but no decision is expected until at least the first week in July.

The Fontainebleau developers sued 11 banks for $3 billion,accusing the banks of pulling back $800 million in promised funding needed to finish the Fontainebleau resort on the Las Vegas Strip.

Fontainebleau Las Vegas LLC asked the court to decide the lawsuit quickly in hopes of restarting work on the casino and opening as soon as possible. Developers had wanted to open the casino in October, but that date is no longer viable. About 70 percent of the project is completed.

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The lenders, including Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas and eight others, are expected to file a written statement by July 1 and Fontainebleau will have one week to respond, Fontainebleau spokesman Lance Ignon told Business Week on Wednesday.

Lawyers for the banks said in a Tuesday court filing that the project ran hundreds of millions of dollars above projected costs and said the developers may have misrepresented their ability to pay off their debts.

Specifically, the banks said in the court filing that evidence shows Fontainebleau was $130 million over budget in March, when the banks say Fontainebleau told them that the project would delay its opening from October to November, resulting in increased construction and debt costs.

The lenders said they gave the developers nearly $138 million on March 25 after an advance request from Fontainebleau.

But it apparently wasn’t enough, the lenders said, because Fontainebleau officials said in an April 17 meeting that they were short on paying construction bills.