Bank of America Corp., agent for a loan to a failed casino development by Fontainebleau Las Vegas LLC, was sent back to district court to resolve claims that it acted negligently under the loan agreement, Bloomberg News reported yesterday. Bank of America was responsible for paying lenders’ money to Fontainebleau for a project at the north end of the Las Vegas Strip with an initial budget of $2.9 billion. In its July 26 decision, the U.S. Court of Appeals in Atlanta examined whether the bank was right to disburse some funds after the financial crisis began in 2008. The lenders said Bank of America’s payment to Fontainebleau in March 2009, amid a credit crunch spurred by Lehman Brothers Holdings Inc.’s bankruptcy, was “untimely,” as the borrower had failed to disclose anticipated project costs and some lenders had dropped out. They challenged a U.S. district judge’s decision that the bank acted in keeping with its agreements.
