Santa Fe Gaming ("the company") asserted in bankruptcy court on March 19, 1999 that Pioneer Noteholders could not sue to enforce the company's guarantee of those bonds unless they owned 25% of the notes. The company based its assertion on Section 507 of the Pioneer Indenture, which is the same as Section 6.6 in the Indenture backing the Santa Fe Hotel notes.

Section 507 of the Pioneer Indenture, and the similar Section 6.6 of the Santa Fe Hotel Indenture, would also allow holders of a majority of the notes to prevent minority holders from ever suing to enforce the company's guarantee, under the company's interpretation.

The company even asserted that Pioneer Section 508, like Section 6.7 in the Santa Fe Indenture -- stating that the right to receive principal and interest payment at maturity cannot be impaired -- does not apply to the company's guarantee of that payment, until the procedure in Section 507 is followed.

Courtney Alexander, Culinary Union research director, commented: "Santa Fe Hotel noteholders need a guarantee that the company will honor, as Santa Fe Gaming tries to contain its current financial crisis. Santa Fe noteholders should be concerned that the company believes there are loopholes in its guarantees."