November 23, 2009 / 6:30 AM / 8 years ago

UPDATE 2-Majestic Star Casino files for bankruptcy

* Seeks bankruptcy after creditor talks fail

* Lists assets of $402.1 mln, liabilities of $771.1 mln

* Owned by Chicago businessman Don Barden (Adds details, background throughout)

By Tom Hals

WILMINGTON, Del. , Nov 23 (Reuters) - U.S. casino operator Majestic Star Casino LLC filed for bankruptcy on Monday after months of talks failed to produce an agreement on restructuring its defaulted debt, court documents showed.

The owner of casinos in Indiana, Mississippi and Colorado has suffered as competitors have expanded and the economic recession lingered, leaving the company unable to service its debt and invest in its locations.

The Majestic’s parent, Barden Development Inc, is owned by Detroit businessman Don Barden, and is not part of the bankruptcy. Barden Development owns a Las Vegas casino.

The company said recent talks broke down and forced it to file for court protection to prevent creditors from foreclosing on its operations.

The gaming company and seven affiliates seeking protection listed assets of $402.1 million and liabilities of $771.1 million as of Oct. 31.

The company, which employs 2,600, has two Majestic brand casinos in Gary, Indiana, which draws customers from nearby Chicago.

It also operates a hotel and casino in Tunica, Mississippi near Memphis, Tennessee under the Fitzgeralds name as well as a Fitzgeralds casino near Denver.

The company is not seeking debtor-in-possession, or DIP, financing to fund its operations in bankruptcy, according to court documents.

Majestic Star reported having $62.5 million in cash as of June 30, according to a regulatory filing, and said in court documents its business produces positive cash flow, excluding debt payments.

The company has an $80 million revolving credit facility with a first lien on most of its operations followed by $300 million notes that are also secured.

It also has $263.5 million of unsecured notes, according to court documents.

Barden recently lost control of a casino in Pittsburgh after it ran into money problems. The Pittsburgh Post Gazette newspaper reported that a grand jury is investigating the decision to award the gaming license to Barden.

An attorney for Majestic Star did not immediately return a phone call seeking comment.

The case is In re: Majestic Star Casino, U.S. Bankruptcy Court, District of Delaware. No. 09-14136. (Additional reporting by Ajay Kamalakaran in Bangalore) (Reporting by Tom Hals, editing by Dave Zimmerman) ((thomas.hals@thomsonreuters.com; 1-302-993-6283; Reuters Messaging thomas.hals.reuters.com@reuters.net)) ((ajay.kamalakaran@reuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800 +1 646 897 1898; Reuters Messaging: ajay.kamalakaran.reuters.com@reuters.net))

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