In and Out of Bankruptcy: Weathering the Financial Storm in Gaming
September 2011

As everybody is aware, the recent economic turbulence facing the United States (and the world for that matter) has greatly impacted the casino gaming industry. Many institutional investors on Wall Street, as well as private equity firms and large national/international banks, either own equity in, or have lent money to, public and private gaming companies. Many of these loans were made at the top od the marketing with high debt leverage rations, anticipating that casino revenues would remain at historical levels or would continue to climb. However, because gaming is essential an entertainment industry, the economic tumult precipitously reduced consumer discretionary spending, leading to deflated casino revenue. As a result, casino profitability has suffered, major capital projects have been delayed or shelved completely, and many gaming companies have been unable to meet their income or other covenants in their debt obligations.

Faced with such challenges, both lenders and debtors in the gaming industry have been forced to develop solutions that are unique to casino business, whether in or out of the bankruptcy context.

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