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Jerry's Nugget looking for a payout

by Kelsey Butler  |  Published August 15, 2012 at 11:59 AM
casino227x128.jpgCasino operator Jerry's Nugget Inc. is hoping to get access to its secured lenders' cash collateral pot just after filing for bankruptcy.

The debtor on Monday filed a motion requesting access to the cash collateral of secured lenders US Bank NA and CM Capital Services LLC so it could continue operating its Las Vegas casino.

JNI filed for Chapter 11 protection on Monday in the U.S. Bankruptcy Court for the District of Nevada in Las Vegas along with affiliate Spartan Gaming LLC. The companies are seeking joint administration.

JNI attributed its bankruptcy filing to US Bank's refusal to extend the maturity date under its term note. JNI first borrowed $3 million from the bank on Nov. 7, 2005. The term loan was set to mature on Oct. 1, 2011.

In court papers filed Monday, the casino operator said it attempted to restructure the debt with US Bank for months without success. Instead, US Bank on March 6 filed a complaint in a Nevada district court requesting the appointment of a receiver.

In order to provide time for the parties to reach a consensual resolution, the bank continued a March 12 hearing on the matter several times, until a final hearing was scheduled for Aug. 14, prompting the debtor's Chapter 11 filing.

JNI in court papers also blamed its bankruptcy filing on the general economic downturn and its effect on the Las Vegas economy. JNI estimates that 99% of its customers are local residents, court papers show.

The company's net revenue for the year ended Dec. 31, 2010, and Dec. 31, 2011, was $23.34 million and $22.53 million, respectively.

Jerry's Nugget operates a 24,500 square-foot casino, with about 600 slot and video poker machines, nine table games, a sports book, 150-seat bingo hall and a keno area. The debtor said in court papers the casino is valued at about $8 million.

JNI's casino includes two restaurants, Uncle Angelo's Pizza Joint and Jerry's Famous Coffee Shop, as well as Uncle Angelo's Bakery. The facility also has a bar, a theater for stage entertainment, a dance floor, a lounge and a small arcade.

Spartan Gaming owns a total of 12 land parcels in Nevada, two of which are adjacent to JNI's casino and include parking for the gambling establishment. Two of Spartan's real estate holdings are residential properties, which it leases. The residential properties are valued at $145,000, court papers show.

Spartan on Feb. 12, 2010, borrowed $1 million from CM Capital.

As of the petition date, the lender is owed about $943,637, court papers said. In its petition, JNI reported $10 million to $50 million in assets and liabilities.

Debtor counsel Talitha Gray of Gordon Silver could not be reached for comment Tuesday. A call to Jerry's Nugget wasn't returned.
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Tags: CM Capital Services LLC | Jerry's Nugget Inc. | Las Vegas | Spartan Gaming LLC | US Bank NA

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