Details of the monorail’s Chapter 11 bankruptcy have begun emerging since the company’s last week filing in U.S. Bankruptcy Court in Las Vegas.
The company confirmed last week that the filing had been made. The LVCVA’s board of directors on Sept. 1 voted 12-1 to go forward with a prepackaged bankruptcy plan to buy the system.
The Las Vegas Convention and Visitors Authority (LVCA) has made a down payment on the Las Vegas Monorail.
A $1.8 million nonrefundable earnest money deposit was given to the Las Vegas Monorail Co. as part of the LVCVA’s $24.12 million acquisition of the company.
Under terms of the approval, the LVCVA agreed to pay up to $24.26 million for the 3.9-mile electric transit system. Part of the motivation for acquiring the monorail is to secure control of its non-compete agreement that prevents potential competitors from entering the transportation market on the east side of the Strip.
The LVCVA has been working with The Boring Co. for an underground people-mover system that uses Tesla vehicles in dedicated tunnels to move conventioneers from one end of the Las Vegas Convention Center campus to the other.
Elon Musk’s Boring Co. is exploring the possibility of expanding the underground system citywide, but wouldn’t be able to do it if the non-compete agreement was in effect.
The monorail shut itself down in March because of restrictions imposed to slow the spread of the novel coronavirus. Without farebox revenue, the monorail was unable to sustain its operating expenses.
Last week’s court filing lists several previously undisclosed details:
The monorail company has hired Gerald Gordon, founder and chairman of the Business Restructuring & Bankruptcy Department of the Las Vegas firm of Garman Turner Gordon. Gordon has acted as the lead debtor’s counsel in bankruptcy cases involving Herbst Gaming Group, Black Gaming Group, Stratosphere Hotel & Casino, Maxim Hotel & Casino, Aladdin Hotel & Casino, Riviera Hotel & Casino, Fitzgerald’s Gaming Corp., American Wagering (Leroy’s Sports Book) and Hooters Hotel & Casino.
In the details, the monorail company estimates it has up to 49 creditors and estimates assets and liabilities of between $10 million and $50 million.
The 20 largest unsecured creditors listed in the filing are owed more than $1.56 million by the monorail company. The first meeting of creditors is expected to occur in early October.
A resolution approved by the Las Vegas Monorail Co.’s board of directors on Aug. 24 acknowledges the monorail shut down on March 18 and that it hasn’t been able to restart. It notes the LVCVA offer of $24,116,387, the non-refundable earnest money total of $1,791,330 and the plan to file for bankruptcy protection with the LVCVA’s prepackaged offer. Monorail President and CEO Curtis Myles is authorized as the company’s representative.
New York-based Alvarez & Marsal is being hired as a financial adviser in the case. Myles also is authorized to hire other experts during the course of the proceedings.
LVCVA President and CEO Steve Hill explained to his board the monorail system would wind up being sold in an auction and that the LVCVA would have to be the successful bidder in order to acquire it and the acquisition money would be used to pay creditors. If the bid was unsuccessful, the LVCVA would be able to recover the non-refundable earnest money from the eventual buyer.