Hollywood Casino Shreveport faces another creditor in involuntary Chapter 11

By Jeff Pines

Washington, Oct. 26 - Hollywood Casino Shreveport, which is battling an attempt to throw it involuntarily into Chapter 11, has another creditor against it.

The U.S. Bankruptcy Court for the Western District of Louisiana approved Greenwich Insurance Co.'s request to join the involuntary petition. Shreveport Paddlewheels LLC's request to joint the case was granted on Oct. 7.

Hollywood Casino Shreveport owes Greenwich $148,525.13 for fees and expenses over a construction bond for the resort.

The order approving Greenwich's request was filed with the court Tuesday.

On Monday, the informal committee of creditors filed its objection to dismissing or suspending the case. It argued that management's proposed restructuring to take place under a voluntary Chapter 11 will turn the reorganized company's value over to the bondholders leaving the unsecured general creditors with little or nothing.

They want the court to supervise the sale process as opposed to "the present process which appears to be dominated by the bondholders."

Wilhite Electric Co. and Broadmoor/Roy Anderson Corp. are members of the informal committee that along with Black Diamond Capital Management LLC filed the involuntary Chapter 11 on Sept. 10.

In a separate Monday filing, Hollywood Casino Shreveport rejected Black Diamond's request for an examiner. According to the report, Black Diamond is sore over losing a bid to buy the company. Management selected Eldorado Resorts LLC's offer over Black Diamond's offer of $125 million in cash.

Eldorado is offering $7 million in cash, $140 million of new secured 10% notes, $20 million in pay-in-kind preferred stock and 25% of the reorganized company's equity. Hollywood Casino Shreveport valued this offer at $140 million.

In addition, Black Diamond held $2 million of Hollywood Casino Shreveport bonds but started buying more after the resort company announced the sale process, it said. Hollywood Casino Shreveport said Black Diamond started buying more bonds after it became clear the resort company was not interested in its bid.

"It bought its own pain as a strategic move to advance its own bid and should not look to this court for relief. Its interest here is clearly as a bidder not as a creditor," Hollywood Casino Shreveport said.

A hearing on dismissing or suspending the case as well as a request for the appointment of an examiner is scheduled for Oct. 29.

Hollywood Casino's involuntary Chapter 11 case number is 04-13259.

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