Greektown Casino creditors seek to sue investors
Bondholders and unsecured creditors also want to sue for the return of us$ 22.7 million distributed to Kewadin Casinos Gaming Authority, owned by the Sault Ste. Marie Tribe of Chippewa Indians. The tribe also owns Greektown Casino.
Bonds were issued worth us$ 185 million in 2005 to buy out equity positions of Papas and Gatzaros, who partnered with the tribe to open the casino. Other smaller amounts also were paid out to other groups and individuals. Papas received us$ 90.5 million and Gatzaros received us$ 55 million. Gatzaros also retained a 1% ownership stake and received his state gaming license in 2007.
Joel Applebaum, attorney for the unsecured creditors, told U.S. Bankruptcy Judge Walter Shapero that he believed that money was transferred improperly to the insiders. He said they discovered the transfers only when the casino filed its reorganization plan details last month.
Attorneys for Papas and Gatzaros argued that the transaction occurred in 2005, well before the bankruptcy filing in May 2008. Shapero said he would take the matter under advisement.
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