Greektown creditors seek to conduct discovery regarding proposed plan

By Jennifer Lanning Drey

Portland, Ore., Aug. 28 - Greektown Holdings, LLC's official committee of unsecured creditors, MFC Global Investment Management and senior notes indenture trustee Deutsche Bank Trust Co. requested court approval to conduct discovery in connection with Greektown's proposed plan of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the Eastern District of Michigan.

Areas in which the creditors want to conduct discovery include who prepared the plan, the information or valuation on which the plan is based, how the plan was negotiated, the company's efforts to obtain exit financing and its actual current financial performance.

They are also seeking an explanation of the differences between the financial projections included in the company's original disclosure statement and those included in its first amended disclosure statement.

The creditors seek to depose: Clifford J. Vallier, chief financial officer and assistant manager of Greektown; Greektown board members D. Joe McCoy, Jake Mikoljcik and Louis Glazier; Merrill Lynch Capital Corp.; Moelis & Co.'s co-head of recapitalization and restructuring; The Fine Point Group's managing director; and financial advisers from Conway MacKenzie & Dunleavy who worked with Greektown.

The committee, Deutsche Bank and MFC said they have conducted limited discovery in connection with Greektown's disclosure statement, but more comprehensive discovery is necessary for consideration of the company's proposed plan because critical issues were excluded from discovery at the disclosure statement stage.

According to the filing, Greektown argued for limited disclosure discovery on the grounds that the requested discovery related to the plan confirmation.

The committee, Deutsche Bank and MFC said the "limited discovery" provided thus far has failed to shed light on issues including the amount of claims within each of the 32 proposed classes, the amount of intercompany claims and why such claims are slated to receive no recovery.

Additionally, they said it failed to provide the amount of Greektown's cash on hand, the value of its non-core assets being transferred to secured lenders and the value of claims being transferred to secured lenders.

They also said it did not provide a reason Greektown's projections of future income are based on "stale and misleading data."

Absent further disclosure on these and other issues, the creditors said it is impossible to determine whether the company's plan is feasible and satisfies the best interest of creditors test.

Greektown, a Detroit casino operator, filed for bankruptcy on May 29, 2008. Its Chapter 11 case number is 08-53104.

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