If a judge approves a fifth amended reorganization plan, the Las Vegas Monorail Co. could exit bankruptcy soon.
The plan comes at a steep price to bondholders, however.
First-tier bondholders would be paid $13 million of the $451.4 million they are owed.
U.S. Bankruptcy Judge Bruce Markell heard arguments on Monday and is expected to hand down a ruling in the next several days.
Markell approved a disclosure statement on March 9 allowing a vote by first-tier holders on the rail operator’s latest reorganization plan.
The judge required minor wording changes on the fourth amended plan, transforming it into the fifth amended plan currently under consideration.
Bondholders with lower-tier debt, owed $207.2 million, will get nothing under the plan.
The monorail, structured as a nonprofit enterprise, issued $650 million of tax-exempt revenue bonds in 2000 through the Nevada Department of Business and Industry to build the 3.9-mile line linking several of the city’s largest hotels.
The nonprofit filed for Chapter 11 bankruptcy in January 2010 after its ticket revenue fell far short of debt service requirements.
Ambac Assurance Corp., the insurer of the monorail’s senior debt, filed for bankruptcy a few months later.
Markell rejected the third amended plan on Nov. 18 even though 97% of the bondholders voted in favor of it.
He ruled that the monorail could not afford the debt it planned to take on to repay bondholders and that he could not approve a plan that could result in liquidation or the need for further reorganization.
Under the proposal rejected by the judge, the rail operator planned to issue $40 million in face amount of debt to holders of the $450 million of first-tier bonds through three debt instruments: cash-pay bonds, capital expenditure bonds and capital appreciation bonds.
Under the new plan, the monorail operator ratcheted back expansion plans, in addition to proposing to repay less debt.
The fifth amended plan offers first-tier secured bondholders $10 million with interest at 5.5% annually and a default rate of 7.5%, according to court documents.
Unsecured first-tier bondholders would receive $3 million with 3% annual interest until Dec. 31, 2015, and 5.5% interest after that until maturity on June 30, 2055.