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Debbie Reynolds, Hotel in Chapter 11

Lodging: The filings come two months after a purchase agreement for the Las Vegas site fell through. She will continue to perform.

July 08, 1997|NANCY RIVERA BROOKS | TIMES STAFF WRITER

She played the unsinkable Molly Brown on film, but financial problems have conspired to sink Debbie Reynolds and her namesake Las Vegas hotel, which has filed for Bankruptcy Court protection.

The filing comes two months after an agreement to sell the 193-room hotel for $16.8 million folded.

The Debbie Reynolds Hotel, which is several hundred yards from the famed Las Vegas Strip, remains open, and Reynolds will continue to perform her nightclub act there, a spokesman for Reynolds said.

"The hotel is open. It's not closing its doors," said Kevin Sasaki of the Warren Cowan public relations firm.

Reynolds resigned July 3 as chairwoman and a director of Debbie Reynolds Hotel & Casino. She was nonetheless scheduled to perform at 7:30 p.m. Monday in the hotel's theater.

"As the trouper she is, [Reynolds] is performing and will continue to perform," Sasaki said.

Debbie Reynolds Hotel & Casino filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code "due to the inability . . . to generate sufficient funds to cover all of its expenses," the company said in a filing last Thursday with the Securities and Exchange Commission. Two subsidiaries, Debbie Reynolds Management Co. and Debbie Reynolds Resorts Inc., have also filed under Chapter 11.

In addition, Reynolds, who owns 26% of the publicly traded company's stock, filed for bankruptcy protection. That's something she managed to avoid in the mid-1970s after she divorced her second husband and inherited many of his business debts.

"It's heartbreaking to her," Sasaki said. The hotel and a museum displaying a portion of her extensive collection of Hollywood memorabilia are "something she's loved and dreamed of. She's struggled for five years to make the project go," he said.

Under Chapter 11, a company is allowed to continue operating under existing management while it works out a plan to pay its debts. Reynolds' son, Todd Fisher, remains president of the company.

Sasaki said the company will explore such options as finding a partner to operate the business or a buyer. Reynolds was not available for comment.

Debbie Reynolds Hotel & Casino shares closed down 1 cent Monday at 14.5 cents on Nasdaq. It was trading as high as $6.50 in July 1994.

The former film ingenue, who made her return to the movies after three decades with last year's Albert Brooks film "Mother," is the star attraction at the hotel, which she opened in July 1993.

But the hotel has never hit the jackpot. Debbie Reynolds Hotel & Casino lost $6.5 million, or 53 cents a share, on revenue of $6.4 million last year. The company reported negative working capital of $13.8 million as of Dec. 31.

There has been no gambling at the hotel since March 1996, when all 182 of its slot machines were removed by the operator, Jackpot Enterprises Inc., in a contract dispute. The hotel never operated a full casino.

Last October, it looked as if the company was beginning a winning streak when a definitive agreement was announced to sell Debbie Reynolds Hotel & Casino to ILX Inc., a Phoenix-based time-share resort developer, for cash, stock and the assumption of some debt.

The offer was subject to a due diligence investigation by ILX, which on May 16 canceled the purchase.

"We determined it to be in the company's best interests to cancel the transaction as contemplated in the documents," ILX Chief Executive Joe Martori said in a statement at the time.

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Bloomberg News contributed to this report.

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