It has been a very rocky road for Turnberry Associate’s latest project Fontainebleau. Earlier this year it was in an enviable position having secured 100% of its financing prior to construction. However, despite the best planning the project was forced to file Ch. 11 bankruptcy earlier this month. The project ran out of money after the final-stage lenders withheld $675 million in revolver financing in March, citing an unspecific breach of loan covenants. Fontainebleau denies breaching any loan covenants in the lawsuit. Construction on the project has slowed to a halt, with the majority of the workforce laid off.
However it is not all bad news for the future of the project. A short time ago the bankruptcy court approved several of Fontainebleau’s first-day motions, providing partial access to $201 million in cash as well as payment of back wages. Fontainebleau has also asked for an expedited hearing on the matter.
But that’s not all. An unnamed lender has stepped forward to provide enough financing to finish the project if the banks involved will unfreeze current loans. The bankruptcy judge Jay Cristol hearing the case is urging all parties involved to try to work a compromise.
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