A Miami bankruptcy judge has approved a settlement in the litigation against former officers and directors of the Fontainebleau Las Vegas, topping off years of legal wrangling related to the failed project spearheaded by Aventura-based Turnberry Associates’ CEO Jeffrey Soffer.
According to the settlement, approved by U.S. Bankruptcy Court Chief Judge Emeritus A. Jay Cristol, $27.5 million will be paid to the bankruptcy trustee to be distributed to creditors. Of that, $25 million will be paid by the directors’ and officers’ insurance providers — and $2.5 million by “or on behalf” of Soffer.
The deal effectively halts $675 million in claims against the estates by parties related to Soffer, the order says. It also caps the distribution of settlement proceeds to the project’s lenders at $2 million.
“The settlement agreement is the result of extensive arm’s length negotiations between the trustee, the defendants, the insurers and the term lenders over the course of more than two years,” Cristol wrote in his order, citing the settlement as “fair and reasonable.”
In separate litigation, lenders in Nevada, also creditors of the estate, will receive $98 million to resolve their lawsuits.
“We are pleased that all the creditors supported this deal, and that we were able to convince the insurance carriers to pay all of their remaining policy limits to effectuate this global resolution,” said Jason Mazer, a shareholder with Ver Ploeg & Lumpkin and special insurance counsel for the trustee.
The Fontainebleau Las Vegas filed for bankruptcy protection in 2009. Soffer has blamed the bankruptcy on Lehman Brothers’ collapse, and the banking industry’s woes, which led creditors to stop funding construction. In late 2013, a $178 million settlement agreement with creditors for the Fontainebleau Las Vegas was approved by the bankruptcy court in Miami, which gave contractors about $85 million, and construction lenders most of the remaining balance.