A bankruptcy judge approved Monday a reorganization plan for the Las Vegas Mob Experience at the Tropicana resort in which the attraction will remain open and be sold to an investor.
The investor, John Vipulis, has already fronted the attraction some $350,000 to keep it afloat since its October bankruptcy filing, and he plans to pay $2.1 million for the asset.
“It’s a tremendous vote of confidence in the debtor,” Mob Experience bankruptcy attorney Matthew Zirzow of the law firm Gordon Silver told Judge Bruce Markell during a hearing.
With the attraction’s secured debt totaling $20.8 million, most of the project’s original investors — note holders owed $7.35 million — are expected to receive nothing, while most creditors will receive just pennies on the dollar.
Financiers Vion Operations LLC and Strategic Funding Source, for instance, claim to be owed about $4 million but will receive just $363,000.
Subcontractors are being offered 85 percent of their lien claims, the general contractor M.J. Dean Construction will receive an ownership stake in the Experience and the Tropicana agreed to concessions.
The Tropicana, which was owed $442,000 in back rent as of the October bankruptcy, has agreed to a new lease with Vipulis calling for payment of rent equaling 10 percent to 20 percent of gross sales — with some of the payments deferred until Vipulis recovers his investment of $3.75 million and M.J. Dean has recovered its investment of about $2.5 million.
The plan approved by Markell says a liquidation trust will be established to benefit unsecured creditors and that litigation claims, including claims against Experience founder Jay Bloom, will be transferred to that trust.
Mob Experience bankruptcy attorneys have contended that Bloom, who left the attraction in July, was involved in mismanagement that included "diverting funds from the debtor’s payroll account to Order 66 Entertainment LLC," another Bloom-controlled company.
Bloom, in various lawsuits, has denied wrongdoing and claims it’s the current Experience manager, Louis Ventre, who has looted the Experience.
Another Bloom company, the Mafia Collection, claims it owns the mob-era artifacts like guns and photos at the Experience and has demanded that the Experience pay it lease fees that it says totaled $258,000 through November.
The Experience’s bankruptcy attorneys have disputed the Mafia Collection’s claims to the artifacts. Under the reorganization plan approved by Markell on Monday, their ownership will be litigated in state court.
An attorney for the Mafia Collection, Robert Atkinson, said it would soon move to repossess most of the artifacts at the Experience and then "monetize" them by leasing them to another party he declined to identify.
Developed by Bloom and his former partner, Ventre, at a cost of $25 million, the Experience filed for bankruptcy protection Oct. 17 after revenue was lower than expected because of disappointing visitor counts and the attraction was hit with multiple lawsuits over unpaid bills.
What many observers thought to be the best part of the Experience, its interactive portion, was shut down in September. At the time, Experience managers said the shutdown was necessary so equipment could be upgraded. It was later revealed the attraction’s audio-visual equipment had been repossessed for nonpayment of rental fees.
The move reduced the size of the attraction open to the public from about 11,000 square feet to about 26,000 square feet.
Approval of the sales plan to a Vipulis company, JVLV New Holdings LLC, is expected to result in the reopening of the interactive portion of the exhibit in the next few months.
The interactive portion is seen as being crucial for the Experience to compete with the$42 million Mob Museum opening Feb. 14 in downtown Las Vegas.
Also, Ventre may become a consultant to the attraction and the president of JVLV will be Andrew DeMaio.
The Experience said in a bankruptcy court filing that DeMaio previously worked for Century Trade Show Services, eventually as director of operations; was an executive marketing host at nightclub company Angel Management Group and also did marketing and hosting at the Wet Republic pool at the MGM Grand and at LAX nightclub at the Luxor.