LAS VEGAS (CN) – Investors in the troubled $3.1 billion Fontainebleau high-rise on the Las Vegas Strip accuse lending banks of “derailing” the project by refusing to fund their loan commitments – one day after the Fontainebleau filed for Chapter 11 bankruptcy protection in Miami. Dozens of workers received layoff notices on Wednesday.
It’s the second time banks have been sued for failing to turn over money. In April, developers accused the banks of refusing to hand over $800 million promised to finish the project.
In the latest federal case, dozens of lenders say Bank of America and others wrongly denied a line of credit by claiming that notices to do so failed to comply with the terms of the credit agreement.
“The world’s economic circumstances have negatively impacted the project,” the lawsuit states. “These economic circumstances, however, do not justify defendants’ refusal to fund their loan commitments.”
Meanwhile, dozens of workers got layoff notices Wednesday morning, according to the Las Vegas Review-Journal. A spokesman said about 60 people will be laid off, and only 100 workers will remain. The megaresort has been stalled since April, and is only 70 percent complete.
Defendant banks include Bank of America, Merrill Lynch Capital Corp., JPMorgan Chase, Barclays Bank, Deutsche Bank Trust Co. Americas, The Royal Bank of Scotland, Sumitomo Mitsui Banking, Bank of Scotland, HSH Nordbank, MB Financial Bank, and Camulos Master Fund.
Plaintiff investors are represented by Michael Hennigan with Hennigan Bennett of Los Angeles.