Fontainebleau, a huge Las Vegas project that was never completed, filed for bankruptcy, and was taken over for a time by Carl Icahn, is finally allowing those involved to sleep at night as a settlement has been agreed upon after two years of litigation, as reported by the Miami Herald.
A U.S. bankruptcy judge oversaw the $27.5 million settlement for the failure of the $2.9 billion development. Insurers of developers and officers will pay $25 million and the developer Jeffrey Soffer of Turnberry Associates, will pay $2.5 million. James Gassenheimer, attorney for Soffer said, “It is very unusual that insurers will exhaust a policy of this size for a settlement, so in securing this, we achieved the best result for our client.”
A separate litigation by term lenders was settled with a total payout of $98 million. An amount of $93 million was paid by directors and officers insurers and $5 million came from Soffer.
The result was better than expected for Soffer, who could have lost much more. He is still worth $1 billion.
Steve Wynn was skeptical that Carl Icahn could make money in the Fontainebleau gamble, and called it a “declining asset.” He told CNBC in October, “I said (to Icahn) what are you doing behind Fontainebleau? He said, ‘I’ve got a lot of cash, I just took a shot.” Icahn reminded Wynn that the latter thought he was “crazy” when he bought the Stratosphere, and it made Icahn a billion dollars. Wynn didn’t think the Fontainebleau would be as successful for Icahn, and this time, Wynn was right.