July 13 Riviera Holdings Corp RVHL.PK, owner of the Riviera Hotel & Casino on the Las Vegas Strip, has filed for bankruptcy protection under a pre-negotiated deal which will transfer ownership of the company to senior secured lenders.
The proposed reorganization plan has the support of a majority of senior secured lenders, who hold claims under the company's $228 million credit agreement, the company said in a statement late Monday.
In court papers, Riviera said like many casinos in Las Vegas, it had been deeply affected by the slowdown in the U.S. economy and was facing increasing isolation given the recent changes along the north end of the Strip.
Riviera said during the recent economic boom, many properties on the north Strip were sold or torn down to make way for new high-end resorts.
However, as the economy rapidly declined, most of those anticipated new projects either halted construction or failed to start altogether, it said.
"The effects of such nearby vacant lots and uncompleted projects have been considerable. Although Riviera Las Vegas has fewer neighboring competitors, there are also fewer reasons for customers to venture to the north end of the Strip," Riviera said.
In its Chapter 11 petition, the company listed both assets and liabilities in the $100 million to $500 million range.
The company, also owns and operates a casino in Colorado, said any recovery for its current shareholders was highly unlikely.
"There will be no effect on our employees, vendors, and most importantly, our customers," the company's general counsel Tullio Marchionne said.
The case is In re: Riviera Holdings Corp, U.S. Bankruptcy Court, District of Nevada (Las Vegas), No: 10-22910. (Reporting by Santosh Nadgir in Bangalore; Editing by Gopakumar Warrier)