Riviera Holding Corp. and its subsidiaries, Riviera Operating Corp. and Riviera Black Hawk Inc., filed for bankruptcy last month with support from its bondholders. The company owns the Riviera Hotel and Casino in Las Vegas and the Riviera Black Hawk in Colorado. Both casinos are expected to operate as usual throughout the reorganization process.
In light of falling revenues and $247.7 million in debt, Riviera attorneys claimed the company’s debt obligations are worth more than its assets.
“Debtors were faced with declining hotel and casino revenues based on reduced consumer spending, a tightening credit market, and an overall weakening economy,” the company said in its bankruptcy filing.
Riviera reportedly has a restructuring agreement in place with 75 percent of its creditors.
“By agreeing with our secured lenders in advance, we will be able to proceed with an expeditious restructuring through bankruptcy which will provide us with a viable capital structure, as well as additional financing,” Riviera Holdings general counsel Tullio Marchionne said in a statement.
Starwood Capital Group, headed by former Caesars World executive Barry Sternlicht, is one of Riviera’s creditors, and may plan to take over the Las Vegas and Colorado resorts.
According to attorney Gerald Gordon, who is representing Riviera Holdings in the bankruptcy case, Starwood Capital and other investors plan to exchange their debt for a controlling equity stake in the company. The investors also plan to provide up to $30 million in financing. All but $50 million of Riviera’s debt will be wiped away as part of the deal.
Last month’s bankruptcy filing is the third of its kind for the Riviera Hotel and Casino.