Fontainebleau to gain $27.5 million with OK on litigation settlement

By Kali Hays

New York, Jan. 22 – Fontainebleau Las Vegas Holdings, LLC Chapter 7 trustee Soneet R. Kapila received approval of a settlement on litigation against former company officers, directors and managers under a Jan. 22 order from the U.S. Bankruptcy Court for the Southern District of Florida.

As previously reported, the lawsuits being settled alleged breach of fiduciary duty and aiding and abetting of breach of fiduciary duty in connection with allegedly inaccurate information provided to project lenders or third parties.

Parties to the settlement are Kapila, Fontainebleau’s term lenders, the director and officer defendants and indirect company owner Jeffrey Soffer.

Under the settlement, $27.5 million will be paid to the Fontainebleau estates, with $25 million to be paid by the defendants and $2.5 million by or on behalf of Soffer.

The settlement also calls for the waiver of about $675 million in claims filed against the estates by parties related to Soffer.

The term lenders agreed to limit or cap the distribution that they would otherwise be entitled to receive from the settlement payment to $2 million.

In addition, while not conditioned on each other, the term lenders also reached a settlement with Soffer and some director and officer defendants that calls for payment of the lenders of $98 million. The director and officer insurers will pay a total of $93 million of that amount and Soffer will pay $5 million.

Fontainebleau is a Las Vegas-based casino-resort developer. It filed for bankruptcy on June 9, 2009. The company’s Chapter 11 case number is 09-21481.

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