The Miami Jai-Alai casino and fronton pressed its case in bankruptcy court Wednesday to undo a sales agreement to a New York-based gambling operator.
At an afternoon hearing, Miami Jai-Alai lawyer Luis Salazar asked Judge Robert Mark to cancel a 2012 sales contract for $115 million that Salazar said would fall short of what the Miami casino owes lenders. The would-be buyer, Silver Entertainment Gaming and Hospitality, said the company is ready to close on the deal and take possession of the operation.
“It is a contract we worked long and hard for,” said Silver lawyer Thomas Kreller, of the Milbank firm’s Los Angeles office.
Mark held off on a decision until an Oct. 2 hearing, but he said one possibility was to sell the business in a bankruptcy auction that would include Silver.
Miami Jai-Alai did not object to a potential sale, but lawyers say they’re pursuing a reorganization since the casino generates enough significant profits and could afford to continue making debt payments.
At the heart of the case are the particulars of the Silver deal and Miami Jai-Alai’s agreement with the lender behind an $87 million loan to build the casino that was added last year to the money-losing fronton. The loan from ABC Funding carries interest of 15 percent, and included a provision that forced Miami Jai-Alai’s parent, Florida Gaming Corp., to essentially acquire more debt if the company was valued at a higher price during a sale. While Miami Jai-Alai agreed to a $115 million sales price from Silver, a subsequent appraisal but the value at $180 million. (In addition to paying $115 million cash, Silver would assume a $14 million mortgage held by Miami-Dade County for public land transferred to the operation.)
Including an $8 million penalty for rival Hialeah Park opening a casino, Miami Jai-Alai owes ABC $122 million, according to Florida Gaming securities filings.
Florida Gaming has been scrapping with ABC in civil court over closing the sale, and accused ABC of not being cooperative in finishing the transaction. ABC and Silver accuse Miami Jai-Alai of changing its mind on the sale and running to bankruptcy court on Aug. 19 in order to avoid its obligation to close the deal.
Because the amount owed is more than the company can pay, Florida Gaming sees bankruptcy court as a way to avoid wiping out its shareholders and unsecured creditors. “The debtor has a deal for $115 million,” Salazar, of Salazar Jackson in Miami, told Mark. “This is not a deal that can be closed in this case.”