By Emily Chasan
NEW YORK, Feb 11 (Reuters) - Lehman Brothers Holdings Inc sued the developers of the bankrupt, partly built Fontainebleau Las Vegas Resort on Thursday, saying it is owed $129.3 million on a loan made for the casino's retail space.
Lehman said in court documents that it had made a $315 million loan in 2007 so the resort would develop 286,500 square feet of restaurants and nightclubs.
Lehman claims it had a payment guaranty that entitles it to full repayment on the loan, and sued Fontainebleau majority owner Jeffrey Soffer, a Miami developer, and Fontainebleau Resorts LLC to recover the $129.3 million outstanding balance plus interest on the loan.
Soffer said in a statement that he was surprised at Lehman's actions and believes he may have significant counterclaims against the bank.
'Lehman's bankruptcy and default on its obligation to fully fund the retail portion of the project forced us to have to seek outside funding at a time when the credit markets were frozen,' Soffer said. 'While there are guarantees, we believe those guarantees are invalid and that we can readily show that they are invalid.'
The Fontainebleau Las Vegas filed for bankruptcy protection in Florida last June after lenders cut off access to nearly $800 million in construction funds in the wake of cost overruns and the global financial crisis.
But Lehman said that Soffer and Fontainebleau Resorts LLC were not among the entities that have been under court protection. The Fontainebleau Resorts LLC entity is also financing a renovation of the Fontainebleau resort in Miami Beach, according to the company's website.
A Fontainebleau Resorts spokesperson did not return a call seeking comment.
In January, a bankruptcy court approved a $156 million offer from Carl Icahn to buy the unfinished Las Vegas casino. The resort, toward the northern end of the Las Vegas Strip, is expected to have 3,800 rooms and has already cost $2 billion to build.
The case is Lehman Brothers Holdings Inc., v. Jeffrey Soffer, Fontainebleau Resorts LLC, U.S. Bankruptcy Court, Southern District of New York, No. 10-02821.
(Reporting by Emily Chasan in New York, Santosh Nadgir in Bangalore, editing by Leslie Gevirtz, Gary Hill) Keywords: LEHMAN/FONTAINEBLEAU (emily.chasan@thomsonreuters.com; +1 646 223 6114; Reuters Messaging: emily.chasan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Feb 11 (Reuters) - Lehman Brothers Holdings Inc sued the developers of the bankrupt, partly built Fontainebleau Las Vegas Resort on Thursday, saying it is owed $129.3 million on a loan made for the casino's retail space.
Lehman said in court documents that it had made a $315 million loan in 2007 so the resort would develop 286,500 square feet of restaurants and nightclubs.
Lehman claims it had a payment guaranty that entitles it to full repayment on the loan, and sued Fontainebleau majority owner Jeffrey Soffer, a Miami developer, and Fontainebleau Resorts LLC to recover the $129.3 million outstanding balance plus interest on the loan.
Soffer said in a statement that he was surprised at Lehman's actions and believes he may have significant counterclaims against the bank.
'Lehman's bankruptcy and default on its obligation to fully fund the retail portion of the project forced us to have to seek outside funding at a time when the credit markets were frozen,' Soffer said. 'While there are guarantees, we believe those guarantees are invalid and that we can readily show that they are invalid.'
The Fontainebleau Las Vegas filed for bankruptcy protection in Florida last June after lenders cut off access to nearly $800 million in construction funds in the wake of cost overruns and the global financial crisis.
But Lehman said that Soffer and Fontainebleau Resorts LLC were not among the entities that have been under court protection. The Fontainebleau Resorts LLC entity is also financing a renovation of the Fontainebleau resort in Miami Beach, according to the company's website.
A Fontainebleau Resorts spokesperson did not return a call seeking comment.
In January, a bankruptcy court approved a $156 million offer from Carl Icahn to buy the unfinished Las Vegas casino. The resort, toward the northern end of the Las Vegas Strip, is expected to have 3,800 rooms and has already cost $2 billion to build.
The case is Lehman Brothers Holdings Inc., v. Jeffrey Soffer, Fontainebleau Resorts LLC, U.S. Bankruptcy Court, Southern District of New York, No. 10-02821.
(Reporting by Emily Chasan in New York, Santosh Nadgir in Bangalore, editing by Leslie Gevirtz, Gary Hill) Keywords: LEHMAN/FONTAINEBLEAU (emily.chasan@thomsonreuters.com; +1 646 223 6114; Reuters Messaging: emily.chasan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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