Lucky Dragon, the Asian-focused Las Vegas casino served with a foreclosure notice a little more than a year after opening, has been ordered to continue operating its hotel for another month by a bankruptcy hearing judge.
The news comes after the casino developer filed for bankruptcy shortly before the property’s scheduled foreclosure auction earlier this month.
That auction has now been cancelled by the judge, and another hearing is due on 27 March. The casino will remain closed.
The Lucky Dragon opened in November 2016 with high hopes of filling its 204 hotel rooms and suites.
Court records show that the off-Strip, Chinese-themed resort was placed into Chapter 11 protection by its developer Andrew Fonfa, just six days before the property was scheduled for auction.
The resort employs 98 people and filed for bankruptcy “to preserve jobs, pay its creditors and provide certainty to the market,” according to court papers.
The promoter of the property had announced in early January that it would “temporarily” close all gaming and restaurant operations for six months. And its financial troubles were first made public around the same time, when the casino posted a sign on its door reading “casino temporarily closed” after a $90m loan went into default.
The casino’s management previously told FOX5 channel the casino was “reorganizing”, which meant less gaming and dining options, to make sure that there were fewer layoffs for casino workers.
At that time, the developer said the hotel would remain “fully operational” despite the closure of the gaming and restaurant operations.
How much does it owe?
According to the Las Vegas Review-Journal, property records show that Lucky Dragon developer Andrew Fonfa took out a $90m loan in 2016 to finance construction. There are several individuals, companies and groups the Lucky Dragon owes, one of which is Snow Covered Capital which is owed $48.8m.
A number of the property’s investors are EB-5 visa investors. These are people who are not American citizens, but who have invested at least $500,000 in the venture to fulfil conditions required to receive a green card. None of the lawyers were able to comment on how the bankruptcy might affect the immigration status of those individuals.
There was a dispute about the property’s worth during the last hearing. Lawyers for Lucky Dragon appraised the property at $143m in November. However, creditors challenged this and said it was more like $60m. While the hotel’s representation noted that there might be some interested bidders if it becomes available for sale, they would not disclose who these potential buyers might be.
Where is the Lucky Dragon?
Lucky Dragon, located at 300 W. Sahara Ave., just west of Las Vegas Boulevard, consists of a nine-story hotel and a 27,500-square-foot casino in separate buildings. The 2.5-acre resort was designed to cater primarily to Asian-American and other Asian customers. Mr Fonfa, the hotel president, expected about 60% of the patrons to be locals.
But the hotel has lost staff and failed to attract the public, and its lead building contractor claimed that it was owed millions of dollars for unpaid work.
This latest court order to remain open another month is unsurprising. Typically, day-to-day operations are hardly affected when a casino in Las Vegas goes bankrupt, although its management may look to close some amenities or reduce hours.
Lucky Dragon’s bankruptcy lawyer, Samuel Schwartz, told the Las Vegas Review-Journal that the resort “is working actively with its investment bankers and attorneys to refinance or restructure its debt”.
He said Lucky Dragon and lender Snow Covered Capital are working “diligently to achieve a solution to best protect” the assets and investors.
Why did the casino fail?
Just a few months after opening, the Las Vegas Review-Journal reported that the resort closed a restaurant and axed around 100 workers to save costs.
Chinese gamblers at other casinos were reported to say that the problem was not Lucky Dragon’s food and entertainment packages, but its restrictive gaming and comp policy.
Derek Stevens, owner of the D Las Vegas and the Golden Gate, told the Las Vegas Review-Journal that the Lucky Dragon is “very nice” but sits “in a pretty tough location” with little pedestrian traffic, and this may have added to its bad luck.