Las Vegas Monorail set to Exit Bankruptcy after Settlement


The settlement of a dispute between bondholders could become a giant step towards the Las Vegas monorail exiting bankruptcy. The settlement entails second-tier bondholders paying $400,000 to first-tier bondholders out of a reserve fund. All other claims the two had made on each other’s money will be dropped. Both parties will now seek bankruptcy court approval to ask a Minnesota state court to sanction the deal thus ending a complex legal fight that has tied up the monorail case for months.

The original settlement agreement did not satisfy the bondholders because of the unfavorable terms they were offered, namely repayment of $44.5 million in three separate IOUs, which amounted to less than 10% of what they are owed.

The legal tussle began when the monorail project went into default and the $500.2 million owed to the first tier bondholders far exceeded the value of the monorail itself, meaning there was no way to repay any part of the $158.7 million owed to the second tier bondholders. However, the first tier bonds were covered by insurance from Ambac Assurance Corp. But Ambac itself ran into financial difficulties and went under receivership. That was when second tier bond trustee U.S. Bank filed a suit to recover whatever was left.

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