Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Allows Detroit to Keep Casino Tax Revenue
Author: Joel R. Glucksman
Date: October 8, 2013
Key Contacts
Back
Detroit will be allowed to continue accessing casino tax revenue during its bankruptcy proceedings while negotiations with creditors relating to these revenues take place, a bankruptcy court has ruled.
U.S. Bankruptcy Judge Steven Rhodes authorized the struggling city to take in the casino tax revenue – which amounts to roughly $11 million each month – despite objections from bond insurer Syncora Guarantee Inc., which tried to block Detroit from using the funds. Detroit collects roughly $180 million annually from three of its casinos, Reuters reports. Of these funds, nearly $15 million is deposited each month into accounts managed by U.S. Bank to meet collateral requirements. The financial institution also sets aside $4 million each month for quarterly payments to swap counterparties, which leaves Detroit with the remaining $11 million.
However, Syncora insured the swaps as well as a portion of the Detroit pension debt associated with these transactions, and lobbied to block the city from gaining access to the casino revenue. Rhodes ruled that Syncora does not have a lien on the funds and could therefore not inhibit the city from using them, Reuters reports.
The ruling comes as good news for Detroit, which has been heavily reliant on the casino revenue to stay afloat, both before and after filing its unprecedented $18 billion bankruptcy case. Emergency manager Kevyn Orr recently spoke at a deposition, where he noted that the casino revenue has been critical in helping the city meet its most basic obligations, the Detroit Free Press reports. Orr said that the city’s finances had dwindled so low that the paychecks of some city employees were bouncing. However, the casino revenue has been a consistent and steady source of income for the ailing municipality.
Although the court’s decision was a win for Detroit, it can expect to see several other legal challenges brought against it in the coming months. Many legal analysts are watching the case closely, as investors, creditors, and insurers are expected to challenge some of the more complicated provisions of bankruptcy law.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Author: Dan Brecher
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.