Primary lender assumes ownership of failed Lucky Dragon casino resort; property receives no offers at foreclosure auction
The unfortunate Lucky Dragon Hotel and Casino was released back to its primary lender after it got zero bids at a Tuesday auction in Las Vegas. Located in the northern part of the legendary Strip, the property filed for bankruptcy this past February after a little over a year of operation.
Lucky Dragon opened doors in November 2016, featuring Asia-themed hotel, casino, dining, and entertainment facilities. The property includes two buildings, one of which accommodates its hotel portion, while the other is home to the gambling venue.
Signals that the property had serious financial issues were there from the start. However, those issues seem to have grown rapidly, trapping Lucky Dragon in a downward spiral that eventually forced its owners to shutter the casino and dining facilities in January. The property faced foreclosure not long after and then filed for Chapter 11 bankruptcy protection in February. The nine-story hotel closed doors early this month to seal the troubled resort’s quick demise. According to analysts, the Lucky Dragon’s failure to turn into a profitable operation was the swiftest one to have occurred in Las Vegas in decades.
Tuesday’s foreclosure auction saw Snow Covered Capital LLC, a company linked to California developer Enrique Landa and beneficiary of the failed property, assume ownership of Lucky Dragon. The 2.5-acre, 203-room hotel and casino resort was valued at $35-million as the bidding process began, but no offers were made above that initial price.
Property to Reopen Someday
Commenting on the outcome of the Tuesday auction, Mr. Landa told local news outlet the Las Vegas Review-Journal that Lucky Dragon was “a very well-built” property, but it was operated under the wrong business plan. The businessman went on to say that the resort could be very successful if in the right hands. Mr. Landa expressed confidence that Lucky Dragon would reopen one day but could not provide estimate when exactly that was going to happen.
According to Snow Covered Capital consultant Michael Brunet, the Tuesday outcome was quite unexpected as the sale of the property was “marketed very extensively” ahead of the auction. More than 80 prospective buyers had signed non-disclosure agreements, it has become known.
From a Vegas insider: "It doesn't matter who bids on Lucky Dragon at the 'auction,' the primary lender is going to bid a dollar more." #bankruptcytheater
— Vital Vegas (@VitalVegas) October 25, 2018
Popular blog about everything Vegas-related Vital Vegas recently tweeted that the plan was all along for the primary lender to acquire the failed property. In a separate tweet from yesterday, Vital Vegas said that Snow Covered Capital can now sell Lucky Dragon “on its own terms”.
The creditor (sole "bidder"), Snow Covered Capital, now has the option to sell it on its own terms, outside of bankruptcy process. As we shared recently, this was likely the plan all along, miracle offer notwithstanding. https://t.co/6GOemHBzxC https://t.co/o2YuDjMYAE
— Vital Vegas (@VitalVegas) October 30, 2018
The hotel and casino resort was the first to be built from the ground up on the Las Vegas Strip in many years. It was heavily promoted as a property that aimed to cater to Asian high rollers by offering them authentic Asian experience. However, it failed to attract the desired clientèle and that paired with heavy financial troubles from the outset, caused the property’s swift demise.
Upon filing for Chapter 11 bankruptcy protection, Lucky Dragon had nearly $50 million in loans from Snow Covered Capital and nearly $90 million raised by 179 foreign investors who sought US residency by participating in the so-called Immigrant Investor Program.
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