A U.S. bankruptcy judge on Friday said she would not allow slot machine operator Lucky Bucks to settle legal claims arising out of a $250 million dividend to insiders, siding with noteholders who are seeking to claw back those payments, Reuters reported. The noteholders, including investment managers BC Partners, Marathon Asset Management and Monarch Alternative Capital, said that Lucky Bucks should not be allowed to settle their claims for a mere $15 million. They asked U.S. Bankruptcy Judge Karen Owens in Wilmington, Del., to liquidate Lucky Bucks Holdings, the corporate parent company that sold them their notes, and separate it from the reorganization of the operating company Lucky Bucks LLC. Owens agreed, ruling that Lucky Bucks Holdings could be converted to a chapter 7 liquidation because it had no creditors other than the aggrieved noteholders. Those noteholders have already voted to reject the company’s chapter 11 settlement, making a chapter 11 reorganization impossible, she said. Judge Owens delayed her ruling from immediately taking effect, however, saying that a premature chapter 7 conversion of the parent company might trigger change-in-control regulations that would make it harder for the operating subsidiary to maintain its slot machine licenses.
