The Las Vegas Monorail appears poised to emerge from bankruptcy after U.S. Bankruptcy Judge Bruce Markell on Wednesday said its latest reorganization plan is feasible.
Markell in November rejected a Monorail bankruptcy plan because the nonprofit Monorail company, with $650 million in debt, had proposed extinguishing most of that debt but would still have been indebted to the tune of $44.5 million.
Markell said the company would likely fail again with $44.5 million in debt, prompting it to propose a new plan in which the company would be encumbered with $13 million in debt.
The new plan — the fifth proposed — is feasible, Markell wrote in a memorandum filed Wednesday.
“What matters is that the monorail produces more cash than it consumes, and that Las Vegas Monorail Co. has shown that it is more likely than not that it will continue to do so for the foreseeable future,” Markell wrote in Wednesday’s opinion.
Markell directed Monorail attorneys to file a new legal brief consistent with his views, and that should put the bankruptcy case filed in 2010 on the path to conclusion.
With Markell's ruling, the Monorail company said Wednesday it expects to emerge from bankruptcy in the next several weeks.
"We have reached terms to ensure the systems’ continued and future operation, fulfilling the purpose of providing cost-effective, efficient, green transportation for visitors and locals within the Las Vegas Resort Corridor,'' Monorail CEO Curtis Myles said in a statement. ''The company has worked diligently for over two years to restructure its finances in a way that both satisfies its obligations to creditors and allows the company to emerge from Chapter 11 as a financially viable entity."
The significance of the judge’s memo is that the Monorail can move toward exiting bankruptcy without worrying about coming up with a new reorganization plan or a liquidation proposal.
The Monorail has seven stations stretching from the MGM Grand to the closed Sahara hotel-casino. It opened in July 2004 but never achieved financial projections because of disappointing ridership numbers.
Monorail court filings show that despite its $650 million development cost, it’s worth only $16 million to $20 million, based on the revenue it generates.
Despite its financial woes, the 3.9-mile Monorail says it’s a community asset that reduces traffic congestion and has carried more than 50 million riders.