The casino industry, and tribal gaming interests in particular, are watching to see how the Mashantucket Pequot tribe, owner of the Foxwoods casino in Connecticut, handles a billion debt load.
“Foxwoods is going to set the precedent,” said Greg Guedel of the Native American Legal Services Group. “It’s such a significant business enterprise that it is probably going to become a model, good or bad, for whatever happens subsequently.”
Despite plummeting revenues, mounting debt and a default rating from Standard & Poor’s, the tribe “isn’t as desperate” as a private business owner would be in similar circumstances, according to the Hartford Courant. As a sovereign nation, it cannot be forced into Chapter 11 bankruptcy, which means creditors have limited ability to compel payment.
But this is uncharted territory, and sovereign status also may mean the tribe can’t use bankruptcy protection as a way to restructure its $2 billion in debt. Even so, in an interview with the newspaper, a source close to the tribe said bankruptcy is not totally out of the question, even though the tribe prefers to continue negotiating directly with debt holders.