After shutting down on Monday, September 15, MVB Holding LLC, owner of Margaritaville Casino Biloxi, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Gulfport on Tuesday, September 16—a day before a hearing would have been held to determine if the landlord, Clay Point LLC, could seize the property.
Clay Point attorney Don Dornan said the company had planned to ask Harrison County Circuit Judge Michael Ward to give it control of the property because, according to papers filed in July, MVB had not paid rent since the casino opened in 2012 and owed more than $3.8 million, plus $500,000 in taxes that Clay Point had pay on Margaritaville’s behalf. The bankruptcy puts the state court case on hold.
MVB announced in July it would close the casino because it was not able to reach an agreement with Clay Point to build a hotel needed to make the property profitable. Margaritaville’s 371 employees were paid through September 19.
Clay Point owners include the Sims family of Hattiesburg, Gulf Central Seafood and T. Mothers Development Companies, which is controlled by Thomas Brosig who was Margaritaville’s original chief executive officer.
In its bankruptcy filings, MVB said its assets and debts are both $10- $50 million, with 164 creditors and $4.2 million in unsecured debt, including $1.38 million owed to Roy Anderson Corporation, the Biloxi contractor who built the 81,000 square foot complex that featured a 25,000 square foot casino. Owned by 40 investors, MVB estimated secured creditors, including lenders, will claim all its remaining assets and unsecured creditors will get nothing. Singer Jimmy Buffett licenses the name of his famous song but is not an owner. His Margaritaville Enterprises, listed among unsecured creditors, is owed more than $56,000.
Allen Godfrey, executive director of the Mississippi Gaming Commission, said agents were on site when the casino closed at 10 p.m. Monday and remained Tuesday. The shutdown “was very orderly,” he said. Inside, officials counted money and destroyed Margaritaville betting chips, Godfrey said.
Opened in May 2012 with a live Jimmy Buffett concert broadcast worldwide, the $62 million Margaritaville was allowed by the gaming commission to open without a hotel. At the time analysts questioned its small size and since them, commissioners have required 40,000 square feet of casino space, minimum of 300 hotel rooms with a three diamond rating, a fine dining restaurant and an amenity that is unique to the market.
Margaritaville’s owners had announced plans to invest another $64 million to build a 250-room hotel and overhaul the casino.
After Buffett’s first attempt to build a $700 million casino in Biloxi with Caesars Entertainment failed due to the recession, he said he preferred a smaller casino and Back Bay location. But Margaritaville was plagued with problems. Customers complained that the casino was hard to find, it opened without a rewards program, the outdoor area was damaged by a hurricane soon after it opened an employee was hurt when she fell while performing a stunt.
Margaritaville is the second Mississippi casino to close this year, following the June shutdown of Caesars Entertainment’s Harrah’s Tunica Hotel & Casino.
Allen Godfrey, executive director of the Mississippi Gaming Commission, said Margaritaville’s closing “is not a red flag for South Mississippi.” Scarlet Pearl Casino is under construction across the bay in D’Iberville. Developers are kicking the tires” on potential new Coastal casinos, Godfrey said.
Commission Chairman John Hairston said an array of attractions in addition to gaming will help the Gulf Coast avoid what’s taking place in other gaming areas. “The Mississippi River flooding enhanced the decline of Tunica. Hurricane Sandy enhanced the fall of Atlantic City,” he said. And in both of those markets, “it was a single offering, just gaming,” that hastened declines, he added.
Hairston stated, “We have to offer more than gaming” in South Mississippi. To that end, he noted, “There are more things to do in 2014 than there were in 1974 or 1984.” He said coming attractions include family friendly amusement parks and miniature golf courses, sporting events and a headquarters hotel at the Coast Convention Center. “We surely will have a golden shovel in the ground in 36 months. I believe it’s coming together,” Hairston said.
