|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Oct. 9, 2009--Jeffrey Soffer has recused himself from key decisions on selling the bankrupt Fontainebleau Las Vegas, trying to blunt lender concerns about the developer's financial exposure on the $2 billion project, his lawyers said Thursday.
Bankruptcy Judge A. Jay Cristol was skeptical of Soffer's move, saying "nobody is going to believe he's not running the show." Over Fontainebleau objections, Cristol said he would name an outsider to monitor negotiations for the unfinished condo-hotel and casino. The maneuvers come as Fontainebleau lawyers say they're days away from concluding a deal to auction off the project, which would cost an estimated $1.5 billion to finish.
Penn National Gaming is negotiating to make an opening "stalking horse" bid on the Fontainebleau Vegas that would amount to pennies on the dollar for lenders who fronted $1.6 billion for the venture and contractors with roughly $600 million in liens on the property.
Soffer's exposure in the Vegas bankruptcy has gotten more focus as the case enters its fourth month.
He personally guaranteed at least a portion of $200 million in debt on the retail component of the complex, which has not filed for bankruptcy, but did not guarantee the loans on the bankrupt hotel itself.
Penn's offer covers both components, and lenders argue that Soffer has an incentive to negotiate a larger price tag for the retail section at the expense of the hotel section. The lenders have asked Cristol to take the project away from Soffer and have a court-administered sale.
Soffer's company, Fontainebleau Resorts, runs the Vegas Fontainebleau project and the original Fontainebleau in Miami Beach, which Soffer bought in 2005.
The Miami Beach project has not filed for bankruptcy.
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