Las Vegas Monorail bondholders ask court to terminate exclusivity

By Caroline Salls

Pittsburgh, Sept. 9 - Las Vegas Monorail Co.'s indenture trustee and majority first-tier bondholders have asked the U.S. Bankruptcy Court for the District of Nevada to terminate the company's exclusive plan of reorganization filing and vote solicitation periods so they can file a competing plan, according to a Thursday court filing.

"The 1st Tier bondholders are far and away the principal constituency in this case, holding more than 99% of all claims entitled to vote on the debtor's plan of reorganization," the motion said.

"Remarkably, however, the debtor has refused to engage in good-faith negotiations with the 1st Tier bondholders."

Instead, the bondholders said Las Vegas Monorail filed a plan it knew was unacceptable to the first-tier bondholders, "a plan that fails to maximize creditor recoveries and that, on its face, cannot be confirmed over the opposition of the 1st Tier bondholders."

The bondholders said the company has done exactly what the exclusivity provisions of the Bankruptcy Code are designed to discourage.

"The debtors' take-it-or-leave-it approach, the facial unconfirmability of its plan and - perhaps most important of all - the fact that its plan is adamantly opposed by creditors holding more than 99% of all voting claims constitute clear cause to terminate debtors' exclusive period to file and solicit acceptances of a plan," the bondholders said.

Specifically, the bondholders said the plan fails to give the company's only substantial economic stakeholders any of the potential upside of keeping the monorail running beyond 2019 by vastly undervaluing the monorail.

In addition, the bondholder said the plan fails to give them fair value by "hoarding an estimated $26.6 million or more that will not in any way benefit bondholders."

The company, a Las Vegas non-profit monorail operator, filed for bankruptcy on Jan. 13, 2010. The Chapter 11 case number is 10-10464.

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