A bankruptcy judge is to decide this morning whether construction of Greektown’s permanent hotel and casino will continue.
The project’s general contractor and about 90 subcontractors have threatened to stop work and some have already walked off the job citing nonpayment from as far back as February.
On Tuesday, attorneys for Greektown Casino asked U.S. Bankruptcy Judge Walter Shapero to immediately approve a USD 44-million loan to pay contractors.
The USD 44 million is part of USD 150 million in loans that Greektown says is needed to finish the casino’s expansion.
The request was part of a lengthy hearing before Shapero in Detroit Tuesday evening.
„Without this relief, we will see immediate and irreparable damage day by day, hour by hour,“ said Dan Weiner, an attorney for Greektown Casino. „This project has a history of missed and short payments, broken promises and the ability to keep everybody on the job so far, seems to be miraculous.“
A third of the workers building the expanded casino complex did not show up for work Tuesday because they haven’t been paid, said Scott Norris, project executive with Jenkins/Skanska Ventures, as he testified in U.S. Bankruptcy Court.
Three of the roughly 90 subcontractors on the job have stopped working and 123 of 369 workers did not show up to work Tuesday, Norris said.
If emergency financing is not approved, work will stop on the project, setting off a nightmare situation for Greektown, the city and contractors.
The casino, which will miss city-mandated completion deadlines, will face daily fines of USD 40,000 for work not finished on time. It will violate its development agreement with the city, which could cost it its gaming license and its ability to operate.
It also means losing workers to other jobs in other cities and states.
An interruption also will prove costly because contractors will have to dismantle the work site and set it up again once financing is in place.
Few people opposed the casino’s attempts to get immediate financing.
Mark Parry, an attorney for Deutsche Bank, which loaned Greektown USD 185 million, was against the immediate disbursement.
„They are asking for USD 44 million two days after the case is filed, and we don’t know if this financing package is enough to fund this casino to completion,“ Parry said, adding that at least a week should be allowed to look at the financing package.
Alan Green, an attorney for the general contractor Jenkins/Skanska Ventures, told the judge that if financing does not materialize that „the project will fall apart.“
Subcontractors have been paying for materials themselves, and some have said that they are out of credit to continue work, he said.
„Getting paid has been like herding cats,“ Green said. „These contractors are owed a lot of money.“
Representatives of the casino presented a bleak picture as to the state of construction. While most of the gaming floor is complete, less than 50% of the hotel is done, Green told the judge.
So far, the casino currently has borrowed USD 549 million, not all of it for construction, and paid USD 185 million in construction costs.
Attorneys for the casino also told the judge that if the project stops, the casino will likely have a hard time obtaining financing at a future date to finish construction.
Casino officials told the court that the project, barring any further delays, will be completed in the first quarter of 2009. Its current agreement with the city mandates that it be completed by October of this year.
Don McGee, an attorney with the attorney general’s office representing the Gaming Control Board, asked the judge to make the financing package’s approval contingent on the board’s approval.
The gaming control board oversees Detroit’s three casinos.
Earlier in the day, Shapero approved allowing Greektown to pay USD 250,000 in taxes daily to the City of Detroit and the State of Michigan. The city said it needs the revenue to pay its employees.
Greektown filed for bankruptcy protection last week. The casino, which trails MGM Grand Detroit and MotorCity Casino in revenue, remains open.