LAS VEGAS, Nev. -- The Nevada Gaming Commission, seeking guarantees that the bankrupt Landmark hotel-casino can cover casino winners, has allowed the space-needle shaped resort to remain open at least two more weeks while state experts analyzed cash flow problems.
The 498-room resort, which owes numerous creditors $43 million to $46 million, has continued to operate under a court-appointed trustee since Jan. 2 in a Chapter 7 U.S. Bankruptcy Court proceeding.
Bankruptcy trustee Richard Davis, a Las Vegas real estate executive and the owner of a funeral home, has been operating the resort for the past six weeks with approval of the Nevada Gaming Commission. The commission was to decide Wednesday whether to extend the license or order it surrendered for failure to pay fees and taxes.
By unanimous vote, the commission agreed Wednesday to extend the gambling license until a March 5 hearing following a state analysis of more detailed accounting figures.
General Manager Forrest Woodward told the commission Wednesday that the hotel currently has $562,000 cash on hand including $175,000 in profits accumulated during the past six weeks. He said county and state taxes and payroll were being paid on a weekly basis and that advertising costs and flat gambling fees were paid in advance. He said payment to vendors was current.
Woodward acknowledged that current profits could not cover administrative fees or debt service and said 280 or the original 645 employees had quit.
U.S. Bankruptcy Judge Clive Jones as well as representatives of Loyds Bank, which holds the $23.5 million first trustee deed, have asked that the resort continue operating in order to bolster a quick sale at a better price.
A representative of the bank warned commissioners Wednesday that if an agreement could not be negotiated for the financial institution to share in hotel profits including rent, that the bank probably would seek a court order laying claim to the cash on hand.
U.S. bankrutpcy laws and state gaming regulations sometimes are at odds. Bankruptcy allows a business to operate without paying debt service, while state gaming regulations require that a licensee be current in payment of gambling taxes.
Commission chairman John O'Reilly told Landmark officials Wednesday to compile detailed financial information for the state spelling out the 'status of negotiations on the cash collateral and what claim it has on cash and the (casino) bankroll.'
O'Reilly also called for financial information 'to assure all gaming patrons are protected'. He wants monthly financial statements, a showing of compliance with bankruptcy court dictates and a list of all financial obligations including expenses incurred but not paid.
George Swarts, a former member of the Nevada Gaming Commission and a CPA for the Landmark, told the commission the job of the trustee and the administrative staff was 'to make certain we have cash reserves high enough to pay players.'
Swarts told the commission the Landmark had paid $190,000 in state and county taxes under the new trustee. However, a complete accounting of taxes owed was not discussed in the public meeting.
The board was told last month that the gambling license of Landmark hotel owner William 'Wildcat' lapsed when the resort was $500,000 in behind in taxes and penalties.