FRESNO, Calif.--(BUSINESS WIRE)--On Thursday, April 11, 2013, counsel for the trustee (the “Trustee”) under the Indenture (the “Indenture”) governing the 9¾% Secured Notes due 2020 (the “Notes”) issued by the Chukchansi Economic Development Authority (“CEDA”), a wholly owned enterprise of the Picayune Rancheria of the Chukchansi Indians (the “Tribe”), notified counsel for CEDA that it has, at the direction of the holders of the Notes, given notice of an event of default to Rabobank, N.A. (“Rabobank”), the bank designated pursuant to the Indenture as the depositary of revenues generated by the Chukchansi Gold Resort & Casino (“Chukchansi Gold”), and directed that $12,533,658.75 of funds on deposit in the operating account established with Rabobank for the purpose of holding such revenues (or, according to the Trustee in its notice to counsel for CEDA, such lesser amount to maintain a balance of $1,000,000.00 in such operating account) be paid to the Trustee on account of partial payment for the (i) April 1st interest payment due and owing to holders of the Notes under the Indenture and (ii) fees and expenses of the Trustee (and certain professionals acting on its behalf) in connection with its duties under the Indenture (including a request from counsel for the Trustee for a $300,000 retainer in connection with its role acting for the Trustee).
Further, counsel for the Trustee stated in its notice to counsel for CEDA:
“I have been asked to emphasize that the holders took that action given the current inability to reach a consensual arrangement for the stabilization of casino operations and an agreed procedure between your two ‘factions’ for the payment of even the most basic of casino related expenses. We also note the absence of any agreement on even a process for discussing or hearing the ultimate resolution of the disputes between what we have referred to as the ‘two factions seeking control of governance of the casino and related matters.’ We remain committed to advancing a process in which there can be an amicable resolution, but continue to reserve any and all rights and remedies.”
“We also refer you to the provisions of the applicable documents relating to the step down of the Monthly Tribal Distribution and the provisions relating to the cessation of tribal distributions. At this time, the Trustee has indicated it will forbear from reducing or eliminating the Monthly Tribal Distribution, but we emphasize forbearance on those fronts should not be relied on and there may be no further notice to you of the termination of any forbearance in that regard – the holders and Trustee hope that the situation regarding governance and operations can be addressed in the next few weeks so that a further forbearance can be agreed to. Any agreement with respect to such further forbearance on that or any other matter, of course, will have to be in writing signed by, at a minimum, the Trustee.”
CEDA has commenced a legal proceeding before the legitimately established tribal court (the “Tribal Court”) against Nancy Ayala, Tracey Brechbuehl, Karen Wynn, Charles Sargosa, the Trustee and the holders of the Notes seeking a court order, among other things, declaring unlawful, halting and awarding damages as a result of, an alleged conspiracy among the defendants to usurp the authority and governance of the Tribe and CEDA and dealings between the Trustee and the holders of the Notes, on the one hand, and the other defendants, on the other.
CEDA continues to seek solutions to the disputes with the faction led by Nancy Ayala over Tribal governance and to the difficulties caused by this faction’s refusal to deposit with Rabobank revenues generated by Chukchansi Gold as required by the Indenture.