Fontainebleau inks settlement of Icahn proceeds distribution disputes

By Caroline Salls

Pittsburgh, Oct. 15 - Fontainebleau Las Vegas Holdings, LLC requested court approval of a settlement tied to distribution of Icahn sale proceeds and resolution of related disputes, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of Florida.

The settlement parties include Fontainebleau Chapter 7 trustee Soneet R. Kapila, administrative and disbursement agent Wilmington Trust, NA, term lenders, statutory lienholders, title companies and Turnberry parties.

The company said the settlement will resolve outstanding disputes over the priority, allocation and distribution of proceeds generated from the sale of the assets comprising the Fontainebleau Las Vegas project to Icahn Nevada Gaming Acquisition, LLC in February 2010.

The proposed settlement also resolves the statutory lienholders' appeal of various court orders and disputes arising from the interpretation and enforcement of a completion guaranty provided by Turnberry Residential Limited Partner, LP for the benefit of Wilmington, the term lenders and other parties.

Under the settlement

• The trustee will distribute $176.58 million, comprised of $93.27 million in Icahn sale proceeds, $49.96 million on deposit in a completion guaranty proceeds amount, to be paid to the trustee by Wilmington, and $33.35 million to be paid by the title companies.

From the total distribution, the statutory lienholders will receive $88.91 million, Jeffrey Soffer will receive $1 million, and retail lender agent Lehman Brothers Holdings, Inc. will receive $1 million in satisfaction of an allowed retail lenders' secured claim;

• The title companies will deliver $33 million to the trustee as gross statutory lienholder proceeds and $350,000 to be applied in accordance with the settlement;

• The title companies, term lenders and Wilmington entered into a separate settlement that sets the conditions that must occur before the title companies are obligated to make the $33.35 million payment.

This settlement will also entitle the title companies to a $45 million subrogation claim in connection with any future recovery by Wilmington as an unsecured creditor of Fontainebleau; and

• The court will order the statutory lienholders to participate in mediation regarding the perfection, validity and amount of their lien claims.

Fontainebleau is a Las Vegas-based casino-resort developer. It filed for bankruptcy on June 9, 2009. The company's Chapter 7 case number is 09-21481.

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