Tribes rattle big creditors- Casino Revenues down, vowing to pay tribal members b4 creditors

[Liberal_in_LA]

Tribe's Roll of Dice Rattles Lenders

By MIKE SPECTOR And ALEXANDRA BERZON

Associated Press

Financial troubles at Foxwoods Resort Casino in Connecticut, above, have led to debt-restructuring talks between the Pequots and their lenders.

LEDYARD, Conn.—Michael Thomas, a Pequot Indian with a brash leadership style and a checkered past, was a driving force behind turning Foxwoods Resort Casino into one of the world's largest casinos, and for making tribal members rich in the process. These days, he's being cast as the man who triggered a financial crisis.

With gambling revenues sinking and a showdown with lenders looming, Mr. Thomas vowed last summer to protect dividend payments to tribal members—as high as $120,000 a year for some—before reimbursing creditors owed more than $2 billion.

That audacious move spooked banks and bondholders. Other Pequot leaders, fearing a backlash, disavowed Mr. Thomas's comments and ousted him as chairman of the tribal council. As the crisis worsened, the tribe stopped making debt payments. In July, tribal leaders did exactly what Mr. Thomas said he wouldn't: They said they will halt the payouts that have put two or more BMWs in the driveways of some tribal members, and have made the Mashantucket Pequots the envy of the Indian gambling world. Lenders are now trying to hammer out a debt-restructuring deal with the tribe.

The financial mess on this tiny reservation in rural eastern Connecticut has rattled the once-booming business of casinos run by American Indians, drawing attention to the ramifications of their unique legal status. Tribal-owned casinos can't be forced into bankruptcy, many experts say, because tribes are sovereign nations. And federal law allows no one but Indians themselves to operate casinos on reservations, which effectively prevents creditors from seizing them and selling them off.

The showdown between the Pequots and their lenders, which include Bank of America Corp. and Wells Fargo & Co., has raised what was once an unthinkable question: What happens if a sovereign tribe defaults?

http://online.wsj.com/article/SB10001424052748704206804575467840495234592.html?mod=googlenews_wsj

[Taverner]

1. Tribe before bank - Cool!

As it should be!

[Bonhomme Richard]

2. The house always win. n/t