Margaritaville casino owners seek bankruptcy

AP News
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Posted: Sep 16, 2014 5:55 PM

JACKSON, Miss. (AP) — The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property.

The filing by MVB Holding LLC in U.S. Bankruptcy Court in Gulfport follows the casino's shutdown on Monday night.

Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask Harrison County Circuit Judge Michael Ward to give it control of the property in a Wednesday hearing. Clay Point said in court papers in July that MVB hasn't paid rent since the casino opened in 2012 and owes more than $3.8 million, plus $500,000 in taxes that Clay Point had to step in and pay on Margaritaville's behalf.

The bankruptcy freezes the state court case, leaving a judge to sort things out.

Clay Point was barricading entrances with concrete traffic barriers as MVB filed. Bob Byrd, a bankruptcy lawyer for MVB, said those barricades were later removed. Clay Point's owners include the Sims family of Hattiesburg, Gulf Central Seafood and T. Mothers Development Cos. That last company is controlled by Thomas Brosig, Margaritaville's original CEO.

MVB said in its bankruptcy filing that its assets and debts are both between $10 million and $50 million. The company listed 164 creditors and $4.2 million in unsecured debt, including $1.38 million owed to Roy Anderson Corp. The Biloxi contractor built the 81,000-square-foot complex, which included a 25,000-square-foot casino.

MVB, owned by 40 investors, estimated secured creditors will claim all its remaining assets and unsecured creditors will get nothing.

Byrd said that besides Clay Point, lenders would also be among Margaritaville's large secured creditors.

The company announced in July that it would close the casino, saying it was unable to reach an agreement with Clay Point. Margaritaville's 371 employees will be paid through Friday.

Allen Godfrey, executive director of the Mississippi Gaming Commission, told the Sun Herald that agents were on site when the casino closed at 10 p.m. Monday and remained Tuesday.

"It was very orderly," he said of the shutdown.

Inside money is being counted and Margaritaville betting chips will be destroyed, normally by shredding, Godfrey said.

Margaritaville is the second Mississippi casino to close this year, after Caesars Entertainment Corp. shuttered Harrah's Tunica Hotel & Casino in June. Singer Jimmy Buffett licenses the name of his famous song, but doesn't share ownership. His Margaritaville Enterprises is listed among unsecured creditors, owed more than $56,000.

Mississippi's Gaming Commission allowed Margaritaville, a $62 million project when it opened in May 2012, to be built without a hotel. Analysts questioned its small size, leading to higher investment requirements for new casinos. That means that any new owner could have trouble getting a new casino license without substantial investment in a location isolated from Biloxi's other casinos.

"Once you close up it's a brand new ball game," Godfrey said.

Margaritaville's owners had announced plans to invest another $64 million to build a 250-room hotel and overhaul the casino.

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