Las Vegas Monorail new reorganization plan changes creditor treatment

By Jim Witters

Wilmington, Del., Jan. 31 - Las Vegas Monorail Co.'s revised plan of reorganization that changes treatment of some classes of creditors, according to documents filed Monday with the U.S. Bankruptcy Court for the District of Nevada.

As previously reported, the company's previous plan of reorganization was denied confirmation by judge Bruce A. Markell, who said that plan failed to adequately address long-term, post-mergence financing.

Specifically, the judge stated that the projected shortfall would reach $38.4 million by 2018.

Creditor treatment

Under the terms of the revised plan, treatment of creditors will include:

• Holders of priority claims will be paid in full in cash;

• Holders of other secured claims will be left unimpaired by the reorganized LVMC;

• Holders of general unsecured claims will receive the lesser of 100% of their claim or a share of $300,000. The amount previously was $175,000;

• Holders of first-tier bond secured claims, Ambac surety bond secured claims and Ambac insurance secured claims will receive a share of cash pay A bonds. The $10 million of bonds to be issued by Reorganized LVMC carry interest in arrears at 5.5% and a default rate of 7.5%, payable quarterly in cash. The bonds mature on June 30, 2019.

Ambac's contribution and reimbursement rights with respect to the surety bond claims that have not been assigned to the first tier trustee will be treated by participation in the cash pay A bonds.

The Ambac subrogation rights with respect to the secured claim portion of the Ambac insurance claims are limited to the right to receive the balance of the outstanding payment stream due under the cash pay A bonds after payment of Ambac surety bond secured claims.

Previously, the Ambac claims were not in this class and the first-tier bond secured claim holders were to receive a share of $15 million of 10% cash pay senior notes due June 30, 2019 and $19.5 million of 10% pay-in-kind capital expenditure notes due June 30, 2019;

• Holders of first-tier unsecured bond claims will receive a share of the cash pay B bonds.

The $3 million of cash pay B bonds to be issued by Reorganized LVMC carry an interest rate of 3% through Dec. 31, 2015 and 5.5% on and after Jan. 1, 2016. The bonds mature on June 30, 2055.

Previously the holders of first-tier unsecured bond claims were to receive $10 million of 8.315% pay-in-kind capital appreciation notes;

• Holders of second-tier bond claims will receive no distribution under this plan.

The debtor stipulated with the second-tier trustee, first-tier trustee and majority bondholders to terminate the automatic stay to allow the second-tier trustee to file a petition with the Minnesota State Court seeking authority to distribute the second-tier debt service reserve fund after distributing $400,000 to the first-tier trustee for expenses.

The petition was granted by the Minnesota court.

• Third-tier bond claims will receive no distribution. However, the debtor continues to negotiate with the director and the third-tier trustee regarding their objections to the amended plan. The revised disclosure statement includes notice that those parties may enter into a settlement agreement with the debtor that may become part of the amended plan.

• The director will receive no property other than any funds remaining in the indemnification account within the contingency fund; and

• Holders of subordinated claims will receive no distribution.

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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