RENO (AP) — The Silver Legacy Resort Casino has filed for Chapter 11 bankruptcy, but its owners said it won’t affect the ongoing operations or any of the 1,800 employees at one of the largest hotel-casinos in northern Nevada.
Company officials announced the filing for protection against creditors Thursday while seeking reorganization of a $142.8 million debt.
Gary Carano, the CEO of the Circus and Eldorado Joint Venture, said the operation still has a positive cash flow but has been challenged by the financing markets and sour economy. He told the Reno Gazette-Journal the property’s largest bondholder has agreed to continue restructuring negotiations until June 1 and expects to ultimately “emerge as a stronger company.”
Meanwhile, Carano said it will be “business as usual” for guests and workers at the 1,700-room high-rise in downtown Reno.
“Today’s filing is a tool we are using to complete the restructuring, improve our balance sheet and position our company for long-term future success,” Carano said in a letter to employees on Thursday.
“We expect to issue paychecks normally and to continue benefits, vacations and other programs Silver Legacy provides,” he said.
The 35-story Silver Legacy opened in 1995 at a cost of $350 million. But in the past decade, the proliferation of tribal casinos in California has taken a toll on the Reno-Lake Tahoe region’s gambling industry.
In the past three years in Reno, the Siena Hotel Spa Casino went bankrupt and reopened under new owners and the 2,000-room Grand Sierra Resort and Casino was taken over by its chief financier and later sold.
Ken Adams, an industry analyst in Reno, said he had expected the Silver Legacy to resolve its situation outside of the courts and was surprised the latest negotiations failed.
“It really is a difficult economy to get money in, and a particularly difficult economy to get money if you’re a casino,” he said, adding that bankruptcy is nothing new in the gambling industry.
Las Vegas-based Station Casinos, with 18 properties, emerged last summer after two years in bankruptcy, and the bankrupt Hooters Casino Hotel was bought at auction in February by its main lender.
Caesars Entertainment, with 52 properties including Harrah’s hotel-casinos in Reno and at Lake Tahoe, also has been working with its lenders to avoid bankruptcy.
Under Chapter 11, the Silver Legacy will be protected in the U.S. Bankruptcy Court while it continues operating and working to resolve the mortgage note that was payable in full on March 1. The loan was originally issued in 2002 at an interest rate of 10.13 percent.
Since February, progress in negotiations prompted three deadline extensions, the last one expiring on Monday, to finalize an agreement that would have returned $100 million of the debt to creditors in cash through a new $70 million loan and $30 million in other sources of revenue. Additionally, the creditors would hold a second lien on the property amounting to $27.5 million.