Former casino in disrepair while bankruptcy case continues

VICKSBURG — More than nine months after the Grand Station Casino closed amid bankruptcy, the property near Vicksburg’s City Front is in disrepair as several issues are settled in court.

In October, U.S. Bankruptcy Judge Neil P. Olack awarded the casino to M Street Inc. after it bid $400,000 for the 36,000-square-foot facility in a Chapter 11 proceeding.

The casino closed March 28 and laid off 230 workers.

The sale was expected to close within in a month, but disputes over insurance, property taxes and the vessel’s condition prompted Olack to convert the case to a Chapter 7 liquidation case, leaving the property in limbo.

Last Friday, the drawn-out case plodded along, as lawyers for its former owners were questioned under oath by a major creditor about money owed by the group that ran the adjacent hotel.

State regulators say the closed casino and hotel is far from being licensed to operate as a casino in Mississippi.

“It will not be licensed by the Gaming Commission until the case works itself out in the bankruptcy court and a new applicant comes forward,” Mississippi Gaming Commission deputy director Jay McDaniel said.

Meanwhile, what’s left of a nearby structure, that was razed about 15 months ago, adds to the blight of the area.

The structure built in 1907, was vacated in 2005 and demolished in 2011. It was once known as the Lassiter Grocery Building and later housed Surplus City USA.

Its owner, Malcolm Carson, has sold bricks and scrap from the site since much of it came down a year ago. A mound of bricks remains in the middle of the old store.

Victor Gray-Lewis, the city’s buildings and inspections chief, predicted his department may step up reviews to both sites.

“Carson is supposed to be clearing all of it up, selling the bricks,” Gray-Lewis said. “It would be good for Vicksburg if it was all completed.”

Court papers filed in the Grand Station case show confusion on both sides in the court-approved transfer.

Electricity to the vessel was apparently cut on Nov. 12. In court briefs Bally Gaming, the casino’s most significant creditor, and M Street say they were not informed about the issue.

Pumps near and on the vessel that regulate water level in the cofferdam in which it sits were rendered inoperable by the power loss, prompting questions by M Street over the property’s condition.

M Street told the court in November only a full inspection of the property will help them determine the firm’s interest in finishing the sale.

On Nov. 30, Olack signed an order “allowing for a prompt and orderly liquidation” of assets to satisfy claims made against Delta, the former owners.

The day before the sale was to close, Delta moved to abandon the vessel to Bally, which had filed before the casino closed to the public to foreclose on assets related to a $3 million loan. Delta told the court M Street had “buyer’s remorse” and wanted to walk away from the transaction.

In December, the court appointed Stephen Smith as a trustee to oversee the transfer. No specific timetable is laid out to complete a sale, which involves satisfying 132 creditors listed in court documents.

In a creditors meeting Friday in the Warren County Courthouse, counsel for Bally questioned counterparts for Delta before Smith. No officials from M Street attended.

Records concerning about $1.2 million in uncollected accounts receivable from Great Southern Investment Group, which ran the hotel, remain on the boat, said Nicole Andrighetti, an attorney for Delta, during sworn testimony.

She said payroll issues involving 60 food and beverage employees weren’t pursued when the case was in Chapter 11.

From January to March 2012, the employees were paid by Delta, the casino’s overseer, and not the hotel group, as they should have been, Andrighetti said, adding that hotel officials threatened to eliminate those jobs if they were placed under their own payroll system.

The total amount paid wasn’t immediately available, nor was an explanation of $152,000 in “expense reimbursements” to Delta chief J. Michael Caldwell, Andrighetti said.

Proceedings are set to continue March 1, Smith said, adding, “We still have a lot questions.”

The casino opened in 1993 as Harrah’s. A decade later, it was sold to Columbia Sussex, which renamed it Horizon. Tropicana Entertainment, which was part of Columbia Sussex, took over Horizon’s operations and tried unsuccessfully to sell the casino in 2007.

In 2010, Delta bought the casino for $3.25 million in cash plus liabilities, one of which is a lease with the city for 2.95 acres at City Front.

 

[RSS Feed] [del.icio.us]



To sign up for Mississippi Business Daily Updates, click here.

POST A COMMENT

 

FOLLOW THE MBJ ON TWITTER

Top Posts & Pages