The Las Vegas Hooters Resort & Casino filed for bankruptcy protection on Monday against more than $162 million in debt.Although gaming revenue is low everywhere, people are spending money on drinks and nightclubs — and nationally breastaurants are killing it. So how did this company lose money?
Debt holder Canpartners Realty Holding Company IV slammed management and suggested a possible lawsuit regarding excessive executive pay in a court filing, according to Vegas Inc:
Canpartners noted in a court filing that Deborah Pierce, the chief financial officer of Hooters casino’s parent company, 155 East Tropicana LLC, in early July had an annual base salary of $191,406 – not counting potential bonuses.
“Sometime last month, on the eve of bankruptcy, Ms. Pierce’s base salary was increased by 61 per cent (to $307,406),” Canpartners said in the brief.
Canpartners charged that while “hotel and casino revenues have steadily decreased since 2007, the salaries of executive level employees have dramatically increased during this same timeframe.”
“Based on the company’s financial statements previously provided to Canpartners by Ms. Pierce, net revenue declined by 34 per cent from $66.5 million to $43.7 million from 2007 to 2010, respectively,” Canpartners’ filing said. “During that same time period of revenue decline, executive salaries increased 8 per cent whereas salaries for all departments excluding executives declined by 26 per cent and full-time employees were reduced by 37 per cent from 966 FTEs to 605 FTEs.”
The brief suggests that Hooters Resort management was fiddling for years while the casino burned. For a lesson in what they should have done, note the radical new pay scheme at Steve Wynn’s casinos.
Canpartners may sue to block bankruptcy and allow a foreclosure.
NOW WATCH: Ideas videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.