Litigation against the Fontainebleau Las Vegas’ former directors and officers has been approved for a settlement by a Miami bankruptcy judge. The decision concludes a dispute that lasted several years, regarding a project led by Jeffrey Soffer, CEO of Aventura-based Turnberry Associates, which failed.
The bankruptcy trustee will be paid $27.5 million to give to creditors, according to the settlement that U.S. Bankruptcy Court Chief Judge Emeritus A. Jay Cristol approved. $25 million of the settlement will come out of the pockets of the insurance providers of the directors and officers, and the other $2.5 will be paid by or “on behalf” of Soffer.
According to the order, $675 million worth of claims against the estates by Soffer’s parties are basically ended by the deal. It also creates a $2 million limit of settlement proceeds to be distributed to the project’s lenders.
“The settlement agreement is the result of extensive arm’s length negotiations between the trustee, the defendants, the insurers and the term lenders over the course of more than two years,” Cristol wrote in his order, citing the settlement as “fair and reasonable,” according to The Real Deal.
The Nevada lenders, which were also the estate’s creditors, will receive $98 million in a separate litigation to settle their lawsuits.
The trustee’s special insurance counsel and shareholder with Ver Ploeg & Lumpkin, Jason Mazer said, “We are pleased that all the creditors supported this deal, and that we were able to convince the insurance carriers to pay all of their remaining policy limits to effectuate this global resolution.”
In 2009, the Fontainebleau Las Vegas filed for bankruptcy protection. The collapse of the Lehman Brothers and the general problems experienced by the banking industry, have been blamed by Soffer for the bankruptcy, based on creditors being caused by those woes to halt its funding of the construction. According to TRD, “In late 2013, a $178 million settlement agreement with creditors for the Fontainebleau Las Vegas was approved by the bankruptcy court in Miami, which gave contractors about $85 million, and construction lenders most of the remaining balance.”