Foxwoods has Friday bankruptcy hearing

Lest anyone forget why the Pennsylvania Gaming Control Board still has a license to issue for a second Philadelphia casino, a bankruptcy court hearing set for Friday morning offers a reminder.

At the hearing in Philadelphia, lawyers for the defunct Foxwoods project - whose license to build a casino on the South Philadelphia waterfront was revoked four years ago - are scheduled to square off against lawyers for the state over the $50 million license fee Foxwoods paid in 2007.

The key hearing comes just days before Tuesday's Gaming Control Board session at the Convention Center, where the board is expected to reissue the license.

Foxwoods wants a refund of the $50 million. Pennsylvania has refused to return it, and has been backed up by state courts.

As part of a strategy to get the money back in a different venue, the Foxwoods group, formally known as Philadelphia Entertainment & Development Partners, filed for bankruptcy April 1. That was shortly after Foxwoods sold its only asset - the vacant 16.5-acre lot on South Columbus Boulevard between Tasker and Reed Streets where the casino was to be built - to Bart Blatstein for $13 million.

Of the proceeds, $8 million went to the City of Philadelphia to settle a property-tax bill. Philadelphia Entertainment still owes at least $55 million to RBS Citizens for a loan on the land that was sold, plus an additional $23.6 million to unsecured creditors, court filings show.

But the bank is not first in line to be paid if Foxwoods' lawyers convince U.S. Bankruptcy Judge Magdeline D. Coleman that the state should give back the $50 million.

Instead, the first to be paid - up to a certain amount - would be Cozen O'Connor and other law firms that hold stacks of bills from years of work on the Foxwoods project.

The law firm creditors are: Cozen O'Connor, $6.46 million; Klehr Harrison Harvey Branzburg, $1.27 million; Obermayer Rebmann Maxwell & Hippel, $940,757; Blank Rome, $812,231; and Eckert Seamans Cherin & Mellott, $677,930.

Other significant unsecured creditors are: Brian Ford, a casino-industry consultant, $4 million; Washington Philadelphia Investors, the partnership for the 13 local investors in the Foxwoods deal, $5.7 million; and Foxwoods Development Co., the development arm of the Mashantucket Pequot tribe, $2.64 million.

Attorneys from Ballard Spahr L.L.P. are representing the state.