Casino-resort developer Fontainebleau files for bankruptcy protection after failed financing

Casino-resort developer Fontainebleau Vegas said it filed Chapter 11 bankruptcy protection after failing to get certain lenders to provide $800M in construction funding to complete its $2.9B property on the Vegas Strip. Fontainebleau Las Vegas filed a $3B lawsuit in April against Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas & eight other lenders in an effort to access the prearranged financing to pay its construction workers and finish the project, which is 70% complete & eyed an Oct. opening. The complaint alleged the lenders terminated their agreement to provide an $800M revolver loan due to one or more unspecified "events of default" by Fontainebleau. But the developers said they didn't default on any part of their agreement. A spokeswoman told The AP the bank was discussing "restructured financing" with the company. The suit was amended last month to charge 1 of the lenders, Deutsche Bank, purposely interfered with contracts because the bank owns a rival resort also being built on the Strip, projected to open in '10. It is demanding added damages from the bank. "It is unfortunate our lenders forced us to take the step. By reneging on the revolving credit facility, they shut down the project & put thousands of people out of work effectively," said Howard Karawan, CRO of Fontainebleau Vegas. "Our goal now is to secure funding to complete thie world-class project & restructure our existing debt." Fontainebleau Vegas said its other lenders agreed to let the company use cash in its bankruptcy case, and the company is in talks to obtain financing to restart construction at the 3,900-room resort. The Chapter 11 filing includes affiliates Fontainebleau Vegas Holdings & Fontainebleau Las Vegas Capital. It said Fontainebleau Miami Beach property is not included in or affected by the filing & continues to operate as normal. Fontainebleau has withdrawn its Las Vegas lawsuit against the lenders and refiled the case in U.S. Bankruptcy Court in the Southern District of FL, Miami, where its Chapter 11 petition was filed. "Fontainebleau Las Vegas will continue to aggressively prosecute claims against these lenders for failing to honor their contractual commitments," said Scott Baena of Bilzin Sumberg, bankruptcy counsel to the company. The other institutions named in the suit are Merrill Lynch Capital, Barclays Bank, Royal Bank of Scotland, Sumitomo Mitsui Banking NY, Bank of Scotland, HSH Nordbank, Camulos Master Fund & MB Financial Bank.