DiamondJacks casino begins exit from bankruptcy

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Bossier City’s DiamondJack’s casino is being dragged out of bankruptcy by creditors.

Creditors have hired Mississippi’s Foundation Gambling Group to try to improve operations after they were unable to sell the local and Vicksburg, Miss. Diamond-Jacks casinos to an Oklahoma Indian tribe.

Legends Gaming, owner of DiamondJacks, filed for bankruptcy reorganization almost a year ago, with more than $500 million in debts. Creditors approved the reorganization plan last month, but an official date to exit bankruptcy hasn’t been set.

The Bossier City casino employs more than 600 while the Vicksburg casino employs more than 350, according to umbers reported to regulators.

Holders of $181 million in first lien debt will accept $80 million in new bonds, recovering about 46 percent of their losses.

Holders of $116 million in second-lien debt will get nothing, while those who are owed $215 million in other debt will get only $40,000. Current shareholders would also get nothing.

Former Chicago-area gas station owner William McEnery owned 92 percent of Legends Gaming. His Gas City stations were sold off in bankruptcy court in 2011 and McEnery has also claimed bankruptcy.

Under the plan, the reorganized Legends will pay McEnery $200,000 over the course of the year for consulting.

Documents filed with the U.S. Bankruptcy Court in Shreveport show the reorganization was a better option for creditors. Liquidation would have brought an estimated $57 million while the reorganization is expected to recover approximately $86 million.

Bondholders of the new company will include Wayzata Opportunities Fund, Fortress Credit Opportunities Husky Loan Co. of Luxembourg, Bank of America and Wells Fargo. The $80 million in five year-bonds that those companies will hold will pay 10 percent annual interest.

Creditors will be able to acquire shares in the new company and will get to approve its budgets.

Information from the Associated Press contributed to this report.