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DiamondJacks owner countersues over $6.25 million deposit

diamondjackslogoVICKSBURG — An Oklahoma Indian tribe and the bankrupt owner of two DiamondJacks casinos are suing each other over the collapse of the tribe’s plan to buy the gambling halls.

Global Gaming Solutions, a unit of the Chickasaw Nation of Oklahoma, wants a federal bankruptcy judge to declare that it didn’t break its agreement to buy gambling halls in Bossier City, La., and Vicksburg from Legends Gaming. The tribe said in court papers Tuesday that Legends’ lack of investment in the casinos led to a business decline, breaking the deal, and Global should get back its $6.25 million deposit.

Legends said in a filing Wednesday that Global’s failure to complete the $125-million purchase was an “egregious and intentional” contract breach. Legends wants to keep the $6.25 million and seeks further damages.

The tribe said Legends had agreed to keep up its business, projecting it would spend $300,000 a month on maintenance and improvements, but only spent a combined $100,000 from July through October 2012.

“The debtors failed to invest in necessary capital expenditures, and, further, failed to invest in even the most basic maintenance capital and operating expenses…,” Global wrote in its request seeking return of the $6.25 million.

Legends wrote in court papers that it negotiated with Global even before the bankruptcy, and that the deal ultimately reached makes clear the tribe was to buy the casinos on an “as is” and “where is” basis “with all faults.” The owner said Global assumed the risk that the business would further decline before the purchase was complete. “Global was at all times aware of the debtors’ financial condition,” Legends wrote.

Legends said the tribe’s objection that the plan was unfeasible because the casinos weren’t bringing in enough to repay the deal’s $100 million in debt was a “cynical ploy” that “blatantly violated its express obligations” to try to complete the purchase.

Legends filed for bankruptcy citing $298 million in debts. The Vicksburg casino employs more than 300 people, according to the most recent numbers reported to regulators. The Bossier City casino employs more than 600.

William McEnery owns 92 percent of Legends shares. His Chicago-area gas station group — Gas City — was sold off in bankruptcy court in 2011. McEnery has been forced into personal bankruptcy as well.

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