River City Casino, Missouri
In re Casino red cliff legendary CASINOS, INC.
United States Bankruptcy Court, E.
Attorney s appearing for the Case Leonora S.
Louis, MO, Office of the United States Trustee.
Warfield, Blackwell Sanders Peper Martin LLP, St.
Louis, MO, for Unsecured Creditors Committee.
ORDER ON BREAKUP FEES JAMES J.
This matter concerns the motion of President Casinos, Inc.
After notice, one written objection was filed on behalf of Pinnacle Entertainment, Inc.
The Court considered oral arguments at a hearing on September 8, 2004 and announced its determinations and orders from the bench.
This is a core proceeding pursuant to Section 157 b 2 A and O of Title 28 of the United States Code.
The Court has jurisdiction over the parties and this matter pursuant to 28 U.
Sections 151, 157 and 1334, and Rule 81-9.
The requests in the Debtors' motion are interrelated and were therefore properly submitted in https://sellingonthenet.info/casino/elton-john-hard-rock-casino.html single pleading.
As a result of these proceedings, the Court will address the request for break-up compensation in this Order, and address the remaining requests in a separate Order.
Initially it is important to note that the Court is not being asked to approve the sale of specific assets to a specific purchaser at this time.
The Debtors and the Official Creditors' Committee have entered into a Sale and Purchase Agreement "Agreement" to sell Closing Shares and certain Trademarks to Penn National Gaming, Inc.
The matter being considered here concerns the Debtors' requests for authorization to sell certain assets, approval of the bid procedures in connection with the sale, approval of the assumption and assignment of certain executory contracts, and approval of a break-up fee.
The break-up fee is included as a provision in the Agreement whereby the Debtor will pay compensation to Penn in the event that, a the Court approves a higher and better offer from another party, and the sale successfully closes; or, b a competing plan of reorganization for PRC-MO containing terms inconsistent with the Sale and Purchase Agreement is confirmed and goes effective.
No party president casino missouri to the allowance or the amount of the break-up compensation.
A break-up fee has been defined as a "fee paid by a seller to a prospective purchaser in the event that the contemplated transaction is not consummated".
In re Tama Beef Packing, Inc.
Iowa Quality Beef Supply Network, L.
BAP 2003 citing in agreement In re O'Brien Environmental Energy, Inc.
O'Brien Environmental Energy, Inc.
When present in a Bankruptcy case a break-up fee is generally not a pre-petition debt of president casino missouri debtor.
To the extent that it can be shown that the break-up fee was actually necessary to preserve the value of the estate, a prospective purchaser may be allowed a claim for administrative expenses under 11 U.
Such a fee can be paid by a debtor from a Bankruptcy estate to the holder of such an allowed claim against the estate.
See O'Brien, 181 F.
It may be argued further that, in the proper circumstances, an unsuccessful "stalking horse" bidder should be entitled to something more than reimbursement of actual costs and expenses that resulted in a demonstrable benefit to the estate.
For example, courts have discussed a "topping fee".
See In re APP Plus, Inc.
Ries, President casino missouri, 845 8th Cir.
A break-up fee that is greater than the actual cost and expenses of the prospective purchaser should constitute a fair and reasonable percentage of the proposed purchase price, and should be reasonably related to the risk, effort, and expenses of the prospective purchaser.
In re Integrated Resources, Inc.
Official Committee of Subordinated Bondholders v.
In the matter being considered here, the Sale and Purchase Agreement, the proposed Bidding Procedures and other documents related to the sale contain several contingencies and alternatives, some of which will be controlled by events outside the Bankruptcy case.
However, until the sale process is concluded, the Court is unable to determine that an additional break-up fee amount will benefit the estate in a demonstrable way.
Tama Beef Packing, Inc.
The record has indicated that this process was not a situation where only one entity had expressed an interest in acquiring some or all of the Debtors' assets.
In its objection here, Pinnacle has argued that it had been negotiating with the Debtors and the Official Committee for the purchase of estate property at about the same time that Penn had been conducting its negotiations.
At least one Court has stated that the business judgment of a debtor is the standard to be applied in the consideration of a break-up fee agreement.
In re Integrated Resources, Inc.
While not disregarding the importance of a debtor's business judgment, the applicable law in this Circuit requires that the determination of whether break-up fees or expenses are allowable as administrative expenses in a bankruptcy case will be made in reference to general administrative expense jurisprudence.
Tama Beef Packing, Inc.
In summary, the Court is unable to find and conclude at this time that the break-up fee that is greater than the actual costs and expenses has or will provide some benefit to the Debtors' estate.
IT IS FURTHER ORDERED that the Debtors are to mail a copy of this Order to all interested parties and president casino missouri file a certification of such mailing with the Clerk of the United States Bankruptcy Court.
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