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Herbst Gaming Inc. Plan to Exit Bankruptcy Criticized

According to a report from the Las Vegas Sun, key creditors and lenders that are owed hundreds of millions of dollars have harshly criticized a plan for Herbst Gaming Inc. to exit bankruptcy.

According to the critics, Herbst and its subsidiaries involved in the bankruptcy case engaged in dubious casino acquisition deals that overwhelmed the company with debt, along with improperly placing the interests of senior lenders ahead of junior lenders and other creditors.

Earlier this year, Herbst Gaming filed for Chapter 11 bankruptcy. The company runs a route business that owns and operates over 6,800 gaming machines in grocery stores, drug stores, convenience stores, bars, and restaurants across Nevada. The company also runs a casino business that owns and operates 12 casinos in Nevada, two in Missouri, and one in Iowa, employing a total of 5,400 people. The gaming division is a sister company to the more than 100-unit Terrible Herbst convenience stores, also based in Las Vegas.

In a July filing with the court, the unsecured creditors claim that Herbst, which is controlled by the Herbst family, was harmed by a pattern of breaches of fiduciary duty, misconduct, and mismanagement by the debtors’ officers and directors, and involved excessive salaries to Herbst officers and improper deals involving Terrible Herbst.

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