Creditors of CSD LLC will probably have plenty of "Danke Schoen"s for the developer of the embattled Wayne Newton Museum.
Judge Bruce Markell of the U.S. Bankruptcy Court for the District of Nevada in Las Vegas on Monday, June 24, signed an order confirming CSD's plan, which will pay most creditors in full.
Debtor counsel Joseph Wielebinski at Munsch Hardt Kopf & Harr PC said the plan would take effect in 14 days.
Under CSD's plan, filed May 17, priority, secured and secured tax claims will be paid in full in cash. Secured creditor Wells Fargo Bank NA's $909,575 claim will be allowed as an unsecured claim. Wells Fargo will be repaid in monthly installments at the nondefault contract rate included in the original loan documents.
General unsecured creditors will be repaid in full in cash. Holders of subordinated claims will be unaffected by the plan. Equity holders will retain their interests.
Shareholder Lacy Harber will fund the plan payments. Harber and his wife, Dorothy, through DLH LLC, own 70% of CSD. DLH holds a $58.81 million unsecured claim against CSD, court papers show.
"This was a long and hotly disputed battle — aptly described as business divorce — but we reached a resolution that was acceptable to all sides, and that paved the way for a prompt confirmation," Wielebinski said about the case's conclusion. "Nine months ago I would've never thought we'd have this wrapped up so quickly. At this juncture, it's been a great result for all involved under the circumstances."
Wielebinski confirmed reports that Newton is no longer living on CSD's Las Vegas property. The debtor purchased the site from the Newtons to convert the home into the Wayne Newton Museum.
A source familiar with the situation said Lacy Harber intended to open up the property to the public for tours in the near future. Markell on May 20 signed an order conditionally approving CSD's disclosure statement.
The judge, meanwhile, on April 20 approved a confidential settlement among CSD, the Harbers, minority shareholders Wayne Newton and wife Kathleen McCrone Newton and minority shareholders Steve Kennedy and Geneva Clark. Newton and his wife, through Sacred Land LLC, own 20% of CSD. Kennedy and Clark, through CSD Management LLC, own the remaining 10% of the debtor.
The settlement, details of which were filed under seal, resolved a contentious battle between the museum developer and the entertainer.
An April 5 motion to approve the settlement said the debtor and its estate would not pay any money to any party and would not be paid any money through the settlement. As part of the deal, the Newtons agreed to release an asserted $19 million claim in the case and support any plan filed by the debtor. Debtor-in-possession lender Neva Lane Acceptance LLC, owed $2.02 million, and the Harbers, through DLH, retained their claims in the case, although they were subordinated to those of other creditors. The settlement resolved all pending litigation among the parties.
CSD had sued Wayne Newton in February for breach of contract, alleging the singer had trespassed on the land meant for the museum project and "intentionally or recklessly frustrated the debtor's very purpose."
In the Feb. 21 adversary complaint, CSD asserted Newton backed out of a deal to build a new home on the 40-acre property so that his current residence could be turned into a museum honoring the singer.
CSD filed for Chapter 11 protection on Oct. 12 due to litigation among the shareholders and a lack of revenue.
In an Oct. 12 declaration, CSD chief restructuring officer Grant Lyon of Odyssey Capital Group LLC said conflict between Newton and the debtor's other owners had stalled development of the museum. In court papers, CSD asserted the entertainer — known as Mr. Las Vegas — and his wife had failed to turn over certain memorabilia that was to be displayed at the museum. Without the collectibles from the "Danke Schoen" singer's 50-year career, CSD couldn't open the museum and bring in any revenue, CSD said.
The Newtons' alleged lack of cooperation in developing the facility led CSD on May 16, 2012, to sue the couple in Nevada state court. The Newtons subsequently filed counterclaims against the debtor.
In court papers, CSD reported $52.78 million in assets and $4.07 million in liabilities.
Lyon and counsel to the Harbers, Charles McCrea at Lionel Sawyer & Collins, could not be reached for comment Monday.