Silver Legacy management says it has filed for voluntary Chapter 11 bankruptcy protection.
Management says the casino will remain open for business. As we've been reporting for months, the Silver Legacy has been working to finalize a $143-million debt restructuring plan.
In a letter released to the media, it says "The Silver Legacy is open and it will be business as usual for our guests, players, team members and business partners. There will be no impact to the operation of our business and the company will continue under the same management team that has been with the silver legacy since it opened. This restructuring gives us the opportunity to improve our balance sheet and make our great business even better. We expect to ultimately emerge as a much stronger company."
It also released this informational guide for employees, vendors and guests of the casino hotel.
FREQUENTLY ASKED QUESTIONS FOR EMPLOYEES
What process will the Company be going through?
We made a voluntary filing under Chapter 11 that will restructure our obligations under our mortgage notes and permit us to ultimately emerge as a stronger company.
How long will this process take?
While we can't predict an exact time frame, we are going to move through this process as quickly as possible.
Will team members and business partners get paid during this time?
Yes. Checks will be issued in the normal course.
If operations are normal, why did you file for bankruptcy?
Our issues relate to our long term debt and not our operations—we generate positive cash flow. We filed bankruptcy because our mortgage notes became due and payable at maturity in March 2012 and we need to restructure our payment obligations with respect to those notes. We expect to improve our balance sheet and emerge from bankruptcy as a stronger company.
Do you have enough money to continue to operate your businesses?
Yes. Our casino is successful and continues to generate positive cash flow. We expect to have more than sufficient cash available to continue normal operations during the course of our financial restructuring.
Is Silver Legacy for sale?
No. Our restructuring plan does not involve the sale of the Company or any of its assets.
Who will run the Company? Will management remain in place?
The current management team, which has been at the helm of the Company since its inception, will remain in place. The operations of our Partners, MGM Resorts International and Eldorado, are not impacted by the bankruptcy, and they remain committed to helping us through this process.
What does the bankruptcy filing mean for Silver Legacy?
Silver Legacy voluntarily filed for bankruptcy to restructure its mortgage notes under Chapter 11 of the U.S. Bankruptcy Code. The Company is not going out of business or closing its doors. Silver Legacy's issues relate to its obligations under its mortgage notes and are not operational. Silver Legacy continues to generate positive cash flow and will continue to operate normally throughout the process.
Does this filing affect the operations of the Joint Venture Partners or any of their other properties?
No, the filing does not.
Team Member Questions and Answers
When will my next paycheck be issued?
Paychecks will continue to be issued on the normal scheduled paydays.
How will the filing affect my job?
It doesn't and won't. You should not notice any difference in the operations of the Company. Business will go on as usual.
Will there be any changes to Team Member compensation?
We do not plan on making any changes to team member compensation. We have requested that the Court grant us authority to pay employee wages and benefits without interruption. Paychecks will be issued as they always have. Court approval of most such programs is normal and routine, so we don't expect any changes.
What about my benefit programs?
The Company is seeking approval from the Court to honor all team member benefits including health insurance, our 401(k) plan and accrued vacation. We do not expect to see any changes to these benefit programs as a result of the voluntary Chapter 11 bankruptcy filing
Will there be any layoffs as a result of the bankruptcy filing?
We will continue to evaluate our business operations regularly as we always have. Any decisions regarding employment and operations will continue to be made based on the business and operational needs of the Company, not as a result of the filing for bankruptcy.
How will the filing affect our day-to-day operations?
The bankruptcy filing shouldn't have any effect on our day-to-day operations. We'll be operating as usual. We will continue to maintain our high standards and our commitment to outstanding guest service.
What happens if I have an uncashed expense check that was issued before the filing?
All team members will be taken care of. Please see your supervisor.
How will we be kept informed about our progress?
You will receive updates from Gary on a regular basis when any significant events occur.
Will there be a change in Company management now that we have filed Chapter 11?
The current management team, who has been at the helm of the Company since it began operations in 1995, will remain in place.
Guest and Player Questions and Answers
What is Silver Legacy's current financial situation?
Our casino is a successful business that continues to generate positive cash flow. However, because our mortgage notes matured in March and we were not able to refinance those obligations through traditional financing sources, we have to reach an arrangement with the holders of those notes to restructure that debt. This will have no impact on our casino operations.
Will guest service levels be impacte
Absolutely not! We pride ourselves on our outstanding customer service. Our Team Members are at your service to ensure you have a great experience each and every time you visit Silver Legacy.
Will my Legacy Star Rewards points be impacted?
Not at all! You will see no changes to this program and your earned complimentaries and free play will be honored exactly as they have been in the past.
Will the slot machines be tighter?
Absolutely not! We will continue to have the best and newest gaming products on our casino floors.
Will my gift certificates, room deposits or purchased concert tickets be affected?
No! It is business as usual and we look forward to your upcoming visits!
What does this mean for the conference booking I made for my company?
Conference bookings will not be affected by this process.
Will there be any changes made to the events you currently have on your schedule for the summer?
No, all entertainment and events currently on the calendar will continue as scheduled. We are excited about the summer season and our upcoming promotions and events!
Vendor Questions and Answers
Will I be paid for work performed after the filing date?
Goods and services provided to the Company after the filing date can and will be paid for in the ordinary course. In fact, the Bankruptcy Code gives priority status to such payments. This means that you will receive payment in the ordinary course of business for post-petition goods and services on the same terms as existed when we filed.
What about for work started pre-petition that won't be completed until after the filing?
We will pay the portion relating to the estimated post-petition work. Payment for the pre-petition portion of the work may not be paid unless the Company is authorized by Court order to make the payment and will be paid upon our emergence from Chapter 11, which we intend to do as quickly as possible.
Why should I/my company continue to do business with Silver Legacy?
You should continue to do business with Silver Legacy because the Company will work diligently to ensure prompt payment of all claims it is authorized to pay pursuant to court orders. Going forward, you will be paid in full for goods and services provided after the filing date as required by the Bankruptcy Code. We are hoping to put any such issues behind us and focus on our mutually beneficial business relationship going forward.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a court-supervised reorganization or restructuring of a company's debts and other obligations and provides a way for companies to address their debt while continuing day-to-day operations.
It is not uncommon for fundamentally sound companies to use Chapter 11 to restructure their debt and come out better positioned to compete in their industries. Other companies which have completed this process include Stations Casinos, General Motors and Zenith Electronics.
What happens during Chapter 11?
A major benefit of Chapter 11 is that it permits daily operations to continue. The filing enables Silver Legacy to continue to operate its business effectively while in Chapter 11, with a minimum of disruption and loss of productivity.
What does "going into" and "coming out of" Chapter 11 mean?
"Going into" bankruptcy means the company has filed a voluntary petition to seek relief from creditors and filed with the bankruptcy court other documents requesting the court to allow the company to operate its business under the U.S. Bankruptcy Code. Following the filing of the documents, the organization is operating "in" or "under" Chapter 11 and is able to take advantage of certain provisions in the law. When the Plan of Restructuring is completed and approved by creditors, it is confirmed by the court and the organization "comes out" or "emerges" from Chapter 11 as a reorganized entity.