Creditors strike deal in Cal Neva Resort & Casino bankruptcy case
January 3, 2018
Major creditors in the Cal Neva Resort & Casino bankruptcy case have agreed to a deal that removes a key hurdle in a Silicon Valley billionaire's quest to acquire the financially troubled property this month.
A compromise and settlement agreement between Hall CA-NV LLC, The Penta Building Group, debtor New Cal-Neva Lodge LLC, and other parties was entered in U.S. Bankruptcy Court on Dec. 26. Judge Gregg W. Zive is presiding over the case.
While the settlement does leave Hall well short of the money owed to the firm by New Cal-Neva Lodge LLC, the agreement should ensure the transfer of the property.
Hall, which is based in Texas, said it was owed $30,772,679.24 as of Nov. 28, 2017. That money is in addition to another $1,244,617.90 for an advance, and $660,000.62 to bring current a debt with Capital One, court documents showed.
The bulk of the money owed to Hall was used to fund a multimillion-dollar renovation of the resort and casino in Crystal Bay a few years ago.
"Under the terms of the Compromise and Settlement Agreement that is the subject of the Settlement Motion, Hall has agreed to receive substantially less than it is owed from the Sale Proceeds — specifically, Hall has agreed to receive $26,885,000 plus reimbursement of the monies it advanced to Capital One," said Michael J. Jaynes, president of Hall CA-NV LLC, in a declaration in support of the agreement filed with the court.
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"Hall is not being paid in full under the terms of the Settlement Agreement."
The Las Vegas-based Penta, which was the general contractor for the renovation project, as well its sub-contractors and D4US LLC of Incline Village, will receive $8,025,000. The bulk of that money goes to Penta, which had filed a claim of about $7.1 million with the bankruptcy court.
The agreement paves the way for Lawrence Investments LLC to close the deal by Jan. 10, according to documents filed with the court. That is the designated date from the investment firm to wrap up the transaction.
Timeline created by Emily Kaiser
Lawrence Investments LLC is a venture capital investment firm headed by Oracle Corp. co-founder Larry Ellison.
The compromise and settlement agreement is yet another chapter in the bankruptcy saga of Cal Neva Resort & Casino, which straddles the California and Nevada border. Debtor New Cal-Neva Lodge LLC of St. Helena, Calif., initially filed for bankruptcy in June 2016.
The bankruptcy filing was a byproduct of the spring 2013 purchase of Cal Neva Resort & Casino by Criswell Radovan, a Napa Valley-based real estate firm also doing business as New Cal-Neva Lodge LLC. The resort was later closed in September 2013 for a multimillion-dollar renovation.
"With the reopening, there will be a rebirth … it will be a totally different creature," said Robert Radovan, co-owner of Criswell Radovan, and controlling partner of the property at the time.
"Our goal is to be the entertainment center of the North Shore. The Cal Neva has always been an icon of the North Shore. With a new look and a return to a four- or four-and-a-half-star hotel … we plan to bring it back to what it was in its heyday."
That heyday included the memorable era in the 1960s, when the resort was owned by Frank Sinatra and frequented by the likes of the Rat Pack, Marilyn Monroe, members of the Kennedy family, and mob figures such as Sam Giancana.
However, a series of delays over the years pushed back the grand reopening of Cal Neva Resort & Casino to the point where it never happened. Then, in 2016, New Cal-Neva Lodge LLC filed for bankruptcy in the midst of the renovation.
Originally built in 1926, Cal Neva includes 219 rooms and cottages, restaurants, a spa, open space featuring panoramic views of Lake Tahoe, and a tunnel system Sinatra added so his less reputable buddies could move around unseen.
The property also features a 350-seat show room, 16,000 square feet of meeting space, and the Circle Bar.
Engagement Editor Emily Kaiser contributed to this report. Staff writer Wyatt Haupt Jr. can be reached at 530-550-2652 or via email at email@example.com