Judge approves sale of the Downtown Grand to Vegas Ventures, overruling objections from investors tied to the property

What happened

A Clark County District Court judge has approved the sale of the Downtown Grand hotel-casino to Vegas Ventures LLC, the Las Vegas Review-Journal reported. The court entered its order approving the sale on Oct. 7, according to public records cited by the newspaper. The ruling rejected objections from investors linked to the property's development and clears a major hurdle in the effort to bring the property out of receivership.

The order allows court-appointed receiver Paul Huygens of Province LLC to sell substantially all assets of the receivership estate to Vegas Ventures, free of liens or other legal claims, subject to the purchase agreement. The Review-Journal noted that the order does not confirm the sale has closed, and the purchase price was not disclosed in the filings. Attorneys for the receiver did not immediately respond to the newspaper's request for comment.

Who is buying the Downtown Grand

The buyer

Vegas Ventures is a Massachusetts limited liability company managed by Boston developer William "Bill" Keravuori, according to the Review-Journal, which first reported the deal in August. The company agreed to buy the property after a marketing process run by the receiver. It deposited $2.7 million into escrow on Aug. 13, according to the purchase agreement and court filings.

Plans for the casino and hotel

Under the proposed deal, Vegas Ventures intends to take over the existing lease with Fifth Street Gaming LLC, which operates the casino. Court filings say the buyer plans to choose a qualified third-party operator for the hotel, restaurants and other nongaming operations.

How the property ended up in receivership

The Downtown Grand has been under court-ordered receivership since January, after its ownership entities defaulted on a construction loan, the Review-Journal reported. The outstanding loan balance now exceeds $105 million, according to court records. The approval follows months of work to find a buyer.

What the court found about the sale process

The court found that the receiver ran an appropriate sale process and that the Vegas Ventures offer was the best available to the estate and its creditors. The receiver weighed competing proposals, including their terms and contingencies, and no qualified bid exceeded Banc of California's estimated secured claim. The bank, formerly known as Pacific Western Bank, holds the senior lien and consented to the deal.

The judge also found that the receiver and Vegas Ventures negotiated at arm's length, without collusion and in good faith. The order states the process met reasonable commercial standards.

Investor objections overruled

The objections came from limited partners associated with the junior secured lender, an investment vehicle that financed the conversion of the former Lady Luck hotel-casino into the Downtown Grand. Fifteen nonparty limited partners filed a joint objection asking for disclosure and a reserve fund, and three more limited partners filed individual objections, according to the order.

The court concluded the limited partners lacked standing to object and that their arguments lacked merit even if they had standing. The junior secured lender itself did not object to the sale. The judge found the objectors had received notice and an opportunity to be heard.

Concerns about a supplemental filing

The court considered a supplement filed by the group of 15 objectors even though it found the filing procedurally improper. The judge raised concerns that representing other limited partners without a Nevada law license could amount to the unauthorized practice of law, the Review-Journal reported.

How creditor claims are handled

The sale is set up to transfer the assets free and clear of liens and claims, with those interests attaching to the sale proceeds instead. The arrangement is meant to let the property change hands while creditor claims are resolved through the receivership. For more on property deals around the valley, see our real estate coverage and a recent Arts District land listing.

What to watch next

• Whether and when the sale closes, since the court order does not confirm a closing.
• Whether the purchase price becomes public; it was not disclosed in the court filings.
• Which qualified third-party operator Vegas Ventures selects for the hotel, restaurants and other nongaming operations.
• How creditor claims are addressed from the sale proceeds through the receivership.