Posted Friday, October 9, 2009 10:32 AM | Contributed by Chitown
A settlement over Six Flags Inc.'s lease with New Orleans for the site of the defunct Six Flags New Orleans theme park was approved Thursday by a federal bankruptcy judge in Delaware. Six Flags will pay the city $3 million and 25 percent of any insurance proceeds Six Flags recovers from Hurricane Katrina damage above $65 million.
Read more from AP via Forbes.
25% of insurance proceeds? I'd imagine a lot of that would be reimbursement for destruction of rides and infrastructure. Did the city invest in the rides and infrastructure?
Settlement is just resolving the amount that is owed to the city under the lease contract. Doesn't really matter what the source of the settlement funds is. The parties just cut a deal resolving the oustanding/future contract damage claim.
the 25% of proceeds over $65Million, is a claim on future collateral that the estate doesn't have now, and may never get. It's a bet on the come, and the city realizes that's their only hope of additional money, and the other creditors agreed, because it doesn't take any more out of the existing pot than the $3M.
This ends litigation on both sides, draining money from the estate that other creditors might be entitled to. Seems a win-win.
Im sure Six Flags will be pleased to get rid of that nagin' problem they have had for some time now.
I am just amazed that 4 years after hurricane Katrina they are still waiting for insurance proceeds. That is the problem with the insurance industry. They have deep pockets and know that if they stall and/or refuse to pay long enough the problem will go away because the business will cease to exist. This is what killed Cypress Gardens.
It's taking so long because they sued their insurance company and lost and are appealing the ruling. They had $180 million in insurance coverage and a $5.5 million deductible. However there was a $27.5 million sublimit for flood damage, which one may assume is the majority of the cost of damages. With that sublimit, they were only eligible for $34 million in insurance proceeds, the majority of which they haven't received. We all know the damage was actually much more than that, so they sued the insurance company saying that there was no sublimit for a "Named Storm." The court ruled that the flood sublimit applies for a "Named Storm." So they are appealing that ruling.
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