So the economy has been in a seemingly endless free fall. This is no surprise. It dominates the news on a daily basis and was the number one issue on peoples minds in last years general election. The economy has hit almost every facet of every industry. Thus, it should also be no surprise that the casino and gaming industry has suffered greatly during the current economic recession. It has been a trickle down effect. Individuals and families are not making as much money so they are reluctant to spend. This is pretty straight forward when you are dealing with an industry that asks a person to literally gamble their money for entertainment.
However, for casinos, especially Nevada casinos, the situation goes way beyond that. People are not traveling as far for their vacations if they are traveling at all. Add that to traveling to luxury hotels that feature high class restaurants and thrive on gambling and the hit is much worse. Many casinos are mounting up debt, and, sadly, a few are filing for Chapter 11 Bankruptcy.
Herbst Gaming Inc. has may have the unfortunate distinction of becoming the blue print for future Nevada casino bankruptcy cases, specifically on restructuring a casino’s financial situations. The family owned casino group filed for Chapter 11 in March of 2009. In October the court approved the plan that would reorganize Herbst Gaming Inc. The plan came to such: Banks that had $847.5 million in secured loans will receive $350 million is restructured debt and will be able to claim partial ownership in the company for the rest. Creditors within the trade such as suppliers are to be paid. Close to 120 holders of secured debt have been left with ownership. Of course, there are more details as Chapter 11 Bankruptcy is not a simple matter.
Bankruptcy is not what casinos and casino resorts wish to have hanging over their head. However it is a viable option in the current economic client. It allows casinos to continue operating and paying employees and partners. This may allow the biggest industry in Nevada to keep the cash flowing until the economy turns around.
