The Distressed Debt Report - June 24, 2008

Tropicana Entertainment LLC, which filed for Chapter 11 bankruptcy on May 5, is hoping that the second time will be the charm for the sale of its property in New Jersey, where state regulators yanked its license in late 2007.

After the gaming affiliate of Columbia Sussex Corp. lost its license, the company's Tropicana Hotel and Casino in Atlantic City was put under the control of conservator Gary S. Stein, a retired justice of the New Jersey Supreme Court. The Tropicana is Atlantic City's second-largest casino. On May 29, Stein told the state's Casino Control Commission that the bids he received for the property were too low and asked for permission to restart the process. Officials granted Stein another four months to complete the sale on June 18.

Given the volatile market conditions, increasing numbers of hedge funds are expected to be targeted with the same kinds of self-dealing and overvaluation claims being lodged of late at the SageCrest funds.

Such lawsuits have so far been relatively uncommon in the world of unregulated hedge funds, where investors, embarrassed about publicly revealing their losses, have quietly addressed their complaints directly to fund managers.

Former New York Governor Eliot Spitzer's intention to launch a commercial real estate vulture fund mere weeks after resigning from office in disgrace represents a return to roots of a sort for the former hedge fund investor- turned-prosecuting politician. The one-time tormentor of Wall Street and self-appointed guardian of investors will now himself be on the receiving end of compliance dictats and regulatory scorn. Full Story

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