City Gets Involved with Greektown

The cash-strapped city of Detroit is paying an investment banking consultant a bonus of more than $1 million to help steer the sale of the troubled Greektown Casino out of bankruptcy protection to a new owner of the city's liking, a city official has confirmed.

City spokesman Daniel Cherrin said the money, being paid to Los Angeles investment banking firm Imperial Capital, would be reimbursable to the city, but it was not clear by whom. A spokesman for Greektown said the casino's development agreement with the city contains no language requiring a reimbursement of the city in the bankruptcy case. A spokesman for the Michigan Gaming Control Board couldn't be reached for comment.

Cherrin didn't disclose terms of the payment, but two sources with direct knowledge of the deal said the bonus will go to Imperial Capital on top of a monthly retainer of $25,000, even if the city ends up getting no say in picking Greektown's new owner.

The sources asked not to be named because they are not authorized to speak on behalf of the city or the attorneys involved.

Lawyers for Greektown will argue in bankruptcy court today that the casino should have extra time to pick who will take control of the city's smallest gambling hall when it emerges from Chapter 11 protection, likely next year. City lawyers argue that the troubled casino is stalling, and that mismanagement threatens the city's monthly cut of millions of dollars in Greektown gambling revenue.

For the complete story, please see Nathan Hurst, Detroit steers Greektown sale, The Detroit News, November 17, 2008.