Fontainebleau, a huge Las Vegas project that was never completed, filed for bankruptcy, and was taken over for a time by Carl Icahn, is finally allowing those involved to sleep at night as a settlement has been agreed upon after two years of litigation, as reported by the Miami Herald.
A U.S. bankruptcy judge oversaw the $27.5 million settlement for the failure of the $2.9 billion development. Insurers of developers and officers will pay $25 million and the developer Jeffrey Soffer of Turnberry Associates, will pay $2.5 million. James Gassenheimer, attorney for Soffer said, “It is very unusual that insurers will exhaust a policy of this size for a settlement, so in securing this, we achieved the best result for our client.”
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at office@jewishbusinessnews.com.
Thank you.
A separate litigation by term lenders was settled with a total payout of $98 million. An amount of $93 million was paid by directors and officers insurers and $5 million came from Soffer.
The result was better than expected for Soffer, who could have lost much more. He is still worth $1 billion.
Steve Wynn was skeptical that Carl Icahn could make money in the Fontainebleau gamble, and called it a “declining asset.” He told CNBC in October, “I said (to Icahn) what are you doing behind Fontainebleau? He said, ‘I’ve got a lot of cash, I just took a shot.” Icahn reminded Wynn that the latter thought he was “crazy” when he bought the Stratosphere, and it made Icahn a billion dollars. Wynn didn’t think the Fontainebleau would be as successful for Icahn, and this time, Wynn was right.
