Bankruptcy court approves plan for Las Vegas Hooters casino

Bankruptcy court approves plan for Las Vegas Hooters casino
By Tim O'Reiley
LAS VEGAS REVIEW-JOURNAL

The owners of the Hooters Hotel in Las Vegas received U.S. Bankruptcy Court permission to spend the money it needs to stay in operation during a Thursday hearing that hinted at some of the potential disputes ahead.

By the time U.S. Bankruptcy Judge Bruce Markell took the bench, attorneys for 155 East Tropicana LLC, the parent company, and the main lender had agreed to terms on keeping the off-Strip casino open for at least 13 more weeks, a standard feature of many corporate bankruptcies. Because the cash generated by a business is generally part of a lender's collateral, a business loses control on spending.

While saying nothing at the hearing, attorneys for Beverly Hills-based Canyon Capital Realty Advisors, by far the largest creditor through an affiliate, filed court papers taking a dig at what it sees as soaring pay in the front office. Quoting a written statement by Hooters chief financial officer Deborah Pierce, Canyon noted, "(H)otel and casino revenues have steadily decreased since 2007, (yet) the salaries of executive-level employees have dramatically increased during the same time frame."

Net revenues for the 696-room hotel dropped 34 percent over the three years to $43.7 million in 2010. Nonexecutive pay dropped 26 percent, and layoffs cut staff by 37 percent. Executive compensation rose by 8 percent, court documents say.

Hooters president Michael Hessling declined to comment except to say, "I have not received a pay raise since 2004."

That was when the current owners purchased the former San Remo and remodeled it as Hooters.

In addition, Canyon contended that Hooters had siphoned $9 million from the operation to unknown bank accounts. However, Hooters attorney Gerald Gordon pointed out that elsewhere in its papers, Canyon reported that Hooters had to file numerous financial reports regularly, including an 83-page annual budget.

The hotel, owned by two Hooters restaurant licensees, the Eastern & Western Hotel Corp., the San Remo's former owner, and Hessling, began the property's overhaul in March 2005 and debuted as Hooters the following February. During the four years through 2009 when it stopped reporting results to the Securities and Exchange Commission, it racked up $64 million in losses that worsened as the recession set in.

"It's a tough, tough economy," Hessling said. "People just aren't spending."

It retained the Gordon Silver law firm, a specialist in bankruptcy and financial distress, three years ago as it became apparent that revenues could never cover loans used for the makeover. The total loans, not including people and companies that deal with Hooters regularly, now approaches $177 million.

Canyon was in the deal from the beginning, supplying $15 million in credit. Last October, it substantially upped the ante by buying corporate bonds with a face value of $127.5 million for just $28 million, giving it 99 percent of the secured debt.

Both sides attempted to negotiate a settlement, where a bankruptcy would have been filed along pre-arranged terms. When talks broke down and Canyon pushed for a foreclosure scheduled for next Monday, Hooters filed Chapter 11 on Aug. 1 to stop the action.

Canyon has invested in numerous distressed or even bankrupt properties through the years and is no stranger to Las Vegas. In 2006, it announced it would finance the renovation of the Lady Luck hotel downtown, but nothing ever happened. Last June, it committed itself to spend $500 million in conjunction with former tennis star Andre Agassi to build 75 charter schools across the country.

Nevada: How Could A Casino Run By Hooters Girls Go Bankrupt?

How Could A Casino Run By Hooters Girls Go Bankrupt?
Gus Lubin


The Las Vegas Hooters Resort & Casino filed for bankruptcy protection on Monday against more than $162 million in debt.

Although gaming revenue is low everywhere, people are spending money on drinks and nightclubs -- and nationally breastaurants are killing it. So how did this company lose money?

Debt holder Canpartners Realty Holding Company IV slammed management and suggested a possible lawsuit regarding excessive executive pay in a court filing, according to Vegas Inc:

Canpartners noted in a court filing that Deborah Pierce, the chief financial officer of Hooters casino’s parent company, 155 East Tropicana LLC, in early July had an annual base salary of $191,406 – not counting potential bonuses.

"Sometime last month, on the eve of bankruptcy, Ms. Pierce’s base salary was increased by 61 percent (to $307,406)," Canpartners said in the brief.

Canpartners charged that while "hotel and casino revenues have steadily decreased since 2007, the salaries of executive level employees have dramatically increased during this same timeframe."

"Based on the company’s financial statements previously provided to Canpartners by Ms. Pierce, net revenue declined by 34 percent from $66.5 million to $43.7 million from 2007 to 2010, respectively," Canpartners’ filing said. "During that same time period of revenue decline, executive salaries increased 8 percent whereas salaries for all departments excluding executives declined by 26 percent and full-time employees were reduced by 37 percent from 966 FTEs to 605 FTEs."

The brief suggests that Hooters Resort management was fiddling for years while the casino burned. For a lesson in what they should have done, note the radical new pay scheme at Steve Wynn's casinos.

Canpartners may sue to block bankruptcy and allow a foreclosure.

Las Vegas Hooters Bankruptcy Won't Impact Hooter’s Restaurants

Hotel Bankruptcy Won’t Impact Hooter’s Restaurants
By Rachel Feintzeig

This week’s bankruptcy filing by the owner of Las Vegas’s Hooters Casino Hotel may have given some devotees of the risqué restaurant chain a start. After all, the name of their beloved eatery, self-proclaimed as “delightfully tacky yet unrefined,” was splashed on headlines across the country as news of the filing made waves.

Fortunately, patrons can take comfort in the following assurance, straight from hotel owner 155 East Tropicana LLC.

“This action in no way affects the operation of the more than 430 Hooters Restaurants in 44 states and 27 countries which are owned or franchised by Atlanta based Hooters of America LLC,” it said in a statement released late Monday.

155 East Tropicana, formed in 2004 to acquire property that would become the world’s first Hooters-themed hotel and casino, has an exclusive license to splash the brand across its venue. But its own financial struggles are not a reflection of the popularity of “Daytona Beach wings”—which can be ordered in the “three mile island” level of spiciness at Hooters establishments across the country—or low-cut tank tops stamped with the iconic orange owl logo.

No, the hotel casino’s troubles have more to do with the economic downturn that’s kept visitors from flocking to Las Vegas over the past several years and motivated rival hotels to slash room rates, according to its bankruptcy filing.

115 East Tropicana “has been faced with declining hotel and casino revenues based on increased price and promotional competition, additional properties opening on the Las Vegas Strip, reduced consumer spending, a tightened credit market, and an overall weakened economy,” the company’s chief financial officer said.