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August 9, 2010 5:58 PM

Milbank, Fried Frank Hit Jackpot with Station Casinos Bankruptcy

Posted by Brian Baxter

Milbank, Tweed, Hadley & McCloy and Fried, Frank, Harris, Shriver & Jacobson have collectively billed for nearly $18 million in fees and expenses in the yearlong Chapter 11 case of Station Casinos, the Las Vegas-based gambling company set to be sold out of bankruptcy to its Ultimate Fighting Championship founders for $722 million.

U.S. bankruptcy judge Gregg Zive in Reno approved a Station reorganization plan on Friday under which the company is to sell most of its casino assets to a group led by Station chairman and CEO Frank Fertitta and his brother Lorenzo, who serves as Station's vice-chairman.

The Fertitta brothers, famous for buying mixed martial arts platform UFC and bringing it into the mainstream, are spending nearly $160 million for a 45 percent stake in Station, according to The Wall Street Journal. Represented by Munger, Tolles & Olson bankruptcy partner Thomas Walper and corporate partners Kevin Masuda and Brett Rodda, the Fertittas will now control 11 casinos--such as the Red Rock Casino and Palace Station establishments--and a portfolio of land holdings and American Indian gaming contracts once held by Station.

Los Angeles-based private investment firm Colony Capital, which helped take Station private in a $5.4 billion leveraged buyout in February 2007, will acquire a smaller stake in the company. O'Melveny & Myers restructuring chair Suzzanne Uhland, tax partner Robert Blashek, and restructuring counsel Andrew Parlen advised Colony on the deal.

The proposed sale marks the beginning of the end of a dizzying array of bankruptcy proceedings designed to unravel subsidiaries set up after Station was taken private three years ago. The various legal machinations, which our own Zach Lowe delved into last December, have resulted in several Am Law 100 firms scoring roles in Station's Chapter 11 case. And those firms have racked up some big bankruptcy bills.

As we noted earlier this year, at one point Zive threatened to appoint a fee examiner unless firms took steps to bring their mounting billables under control.

Milbank, which is serving as lead debtor's counsel through financial restructuring cochair Paul Aronzon and bankruptcy partner Thomas Kreller, has billed Station for more than $10.6 million in postpetition fees and expenses through March 31. Local restructuring counsel Lewis and Roca has submitted bills in excess of $400,000. (Aronzon and Bruce Beesley, head of Lewis and Roca's bankruptcy practice, did not respond to requests for comment.)

Stephen Lerner, the chair of the bankruptcy and restructuring practice at Squire, Sanders & Dempsey, is serving as special litigation counsel to Station's board of directors along with litigation partner Scott Kane. The firm has billed Station for more than $1.2 million in fees and expenses for its role in the case through May 31.

Fried Frank restructuring chair Brad Eric Scheler and bankruptcy and litigation partner Bonnie Steingart are serving as lead counsel to Station's official committee of unsecured creditors. The firm has billed for more than $7.1 million in fees and expenses in the case through May 31. (Scheler did not respond to a request for comment.)

Quinn Emanuel Urquhart & Sullivan has sought more than $2.3 million as conflicts counsel to the creditors committee through June 30, while Greenberg Traurig has requested nearly $1 million in compensation during that same period, despite being replaced as Nevada counsel by Fox Rothschild in April. Fox took over for Greenberg after bankruptcy partners Anne Loraditch and Brett Axelrod took the local representation with them upon joining the firm from Greenberg that same month. (Fox has billed for roughly $313,745 in fees and expenses through June 30.)

Cadwalader, Wickersham & Taft, Gibson, Dunn & Crutcher, and Los Angeles's Stutman Treister & Glatt are representing groups of Station lenders, some of whom supported the Fertitta plan. Bloomberg reports that a dissident group of lenders could settle with Station this week, potentially ending all creditor opposition to the Fertittas plan to regain control of the company.

They weren't the only Am Law 100 firms advising clients in Station's quest to emerge from bankruptcy court.

Skadden, Arps, Slate, Meagher & Flom corporate finance and M&A partner Rodrigo Guerra, Jr., corporate restructuring partner Van Durrer II, and commercial litigation partner Eric Waxman are representing Station independent director Dr. James Nave, who is supervising the sale of the parent company's assets.

A week ago rival Boyd Gaming, advised by Morrison & Foerster, withdrew its bid for Station assets. As the only other viable bidder besides the Fertitta group, Boyd's decision to drop out of the bidding made a formal bankruptcy auction for Station's assets superfluous.

While both Boyd and Station are based in Las Vegas, neither company operates casinos on the strip. Hearings on Station's final reorganization plan are scheduled for later this month in Reno.

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