Majestic Star seeks damages from Barden for improper status change

By Lisa Kerner

Charlotte, N.C., Jan. 3 - Majestic Star Casino, LLC and certain of its affiliates and subsidiaries filed an adversary proceeding with the U.S. Bankruptcy Court for the District of Delaware.

The action is to avoid an unauthorized post-petition transfer and disposition of valuable estate property to Barden Development, Inc., the non-debtor parent corporation of the debtors.

Don H. Barden, BDI's sole shareholder, revoked BDI's status as an S corporation, causing debtor and BDI indirect subsidiary Majestic Star Casino II to be automatically converted into a subchapter C corporation and liable for millions of dollars in tax liabilities in 2010, and millions more going forward, the filing said.

The revocation of the S corporation status was done after the petition date, without any notice to or awareness of the debtors, and without any approval of the court, according to Majestic.

The debtors want Majestic Star Casino II's QSub status restored and want to recover tax payments Majestic Star Casino II was forced to make as well as monetary damages caused by Barden.

Majestic Star, a Las Vegas-based owner and operator of casino hotels, filed for bankruptcy on Nov. 23, 2009. Its Chapter 11 case number is 09-14136.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.