The bankruptcy courts are getting crowded with Las Vegas companies. The latest to join the Chapter 11 ranks is Fontainebleau, the (previously) under-construction mega-resort on the north end of The Strip.
The owners of the development and two of its affiliates filed for bankruptcy protection last week after months of drama that included banks pulling financing, lawsuits all around, layoffs, and construction on the $3 billion projection essentially coming to a halt.
The Fontainebleau was intended to be a modern Las Vegas interpretation of the famed Miami hotel with nearly 4,000 rooms, a 100,000 square-foot casino, restaurants, showrooms, shopping, and more. The mostly finished room tower soars above neighboring Riviera and Sahara on the north end of The Strip, but construction crews were laid off and now the building stands there, effectively dormant.
The trouble started earlier this year when several banks pulled financing for the project after, they allege, the developers missed some important debt payments. The developers say they didn’t miss a payment and accused the banks of collaborating to shut down the project due to conflict of interest (one of the banks is dealing with the also bankrupt, also under construction Cosmopolitan hotel down the street) via a $3 billion lawsuit. Without money to pay people, the bulk of nearly 3,000 construction workers were laid off as were most of the staff in the corporate offices.
The hotel was due to open late this year but that is not going to happen. It’ll probably take the rest of 2009 to sort out the bankruptcy and the lawsuits, all of which will probably need to happen before they can get back to finishing off the resort. Figure late 2010 at the earliest.
From the Vegas4visitors Weekly Update of June 18, 2007:
Big Bucks for Fontainebleau
It’s been talked about for years but it looks like the Fontainebleau project is finally going to move forward with the announcement that the company behind the resort has secured more than $4 billion in financing. Although early stabs at construction on the property, located at the former El Rancho site just north of The Riviera, began in February, it wasn’t until this line of credit was secured that people really believed there would ever actually be a real building there. The Fontainebleau will be modeled after the famed Miami resort of the same name and will feature nearly 4,000 rooms, a casino, a theater, restaurants, convention space, and more with a price tag estimated to be in the $3 billion range. The rest of the line of credit will go toward sprucing up the Miami hotel at the same time. The Vegas version is currently set for a late 2009 bow.
From the Vegas4visitors Weekly Update of April 2, 2007:
Fountainbleau Update
Plans for a multi-billion resort based on the famed Miami hotel of the same name have been in the works for years but little has happened on the site just north of The Riviera where the old El Rancho used to be located. Despite a long-passed date for construction and opening, the project is still on track according to the people behind it, one of whom is a very well-respected Vegas hotel executive who used to be in charge of Mandalay Resorts Group. He says they are actively raising the capital and hope to have work started before the end of 2007.
From the Vegas4visitors Weekly Update of May 23, 2005:
Fountainbleau Set For Strip
The famed Miami Beach resort Fountainbleau will get a Las Vegas sister with the announcement of a $1.5 billion development on The Strip just north of The Riviera and south of The Sahara. Set for the now vacant land that used to be home to The Silverbird (and later El Rancho) and Algiers, the project will evoke the namesake original with a luxurious Miami Beach theme, 4,000 rooms (include many condo units), a casino, and all of the requisite Strip resorts bells and whistles. It’s still in the planning and money-raising phases so anything could happen between now and shovel turning, but if all goes according to plan construction will commence later this year and be complete by 2008.
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