Another chapter in the bankruptcy saga of the failed Fontainebleau Las Vegas resort has closed.
A judge in U.S. Bankruptcy Court in Miami last week signed off on the $27.5 million settlement agreement with officers, directors and managers of the debtors involved in the $2.9 billion development.
Bankruptcy trustee Soneet Kapila reached the agreement after more than two years of negotiations and three years of litigation. Insurers of the directors and officers will pay $25 million and developer Jeffrey Soffer, an owner of Turnberry Associates, will be responsible for paying $2.5 million.
“This settlement is the last piece to resolve the issues that arose out of the unfortunate circumstances surrounding the Fontainebleau Las Vegas Project,” attorney James Gassenheimer, who represented Soffer, said in an email. “It is very unusual that insurers will exhaust a policy of this size for a settlement, so in securing this, we achieved the best result for our client.”
Attorneys Paul Battista and John Genovese represented Kapila in the negotiations while Jason Mazer was special insurance counsel for the trustee.
Separate litigation filed by the term lenders in Nevada was also settled, resulting in a payout of $98 million. Of that, $93 million will be paid by the directors and officers insurers and $5 million will come from Soffer. A $178 million settlement agreement with creditors for the development was approved in December of 2013.
The Las Vegas project was never completed; it filed for bankruptcy protection in 2009. During the bankruptcy process, investor Carl Icahn bought the building.