A Macau court has summoned a company linked to VIP gambling investor Iao Kun Group Holding Co Ltd to respond to a request for bankruptcy made by Galaxy Casino Co Ltd – a subsidiary of Macau casino operator Galaxy Entertainment Group Ltd.
The application against Sang Heng Gaming Promotion Co Ltd was confirmed in a Friday filing by Nasdaq-listed Iao Kun.
The bankruptcy application relates to a letter from the subsidiary of Galaxy Entertainment, which Iao Kun says was received on September 13 by Sang Heng and another Iao Kun promoter, Sang Lung Gaming Promotion Co Ltd.
In the letter, Galaxy Entertainment’s unit stated the promoters had “defaulted” on obligations to repay lines of credit amounting to HKD312 million (US$40.2 million).
Iao Kun said in its Friday filing: “The lines of credit for Sang Heng and Sang Lung are guaranteed by Mr Lam or Mr Vong and are secured by their personal cheques and a deposit paid by Mr Lam.”
That was a reference to – respectively – Iao Kun’s chairman, Lam Man Pou, and its chief executive, Vong Hon Kun.
Iao Kun told Nasdaq on Friday: “On December 12, 2016, the first civil court of the Macau Special Administrative Region Court of First Instance publicly announced that Sang Heng was summoned by such court to respond to a request for bankruptcy filed by Galaxy Casino [Co Ltd] in connection with its desire to liquidate Sang Heng. Sang Heng is required to respond to the summons within 30 days from the date of the second and last publication of the notice. The company has engaged counsel in Macau to handle the matter and to defend the claim against Sang Heng and Sang Lung.”
On September 15, Galaxy Entertainment said it had terminated agreements with Iao Kun for what the casino group alleged was a breach of contract by the VIP gambling sector investor.
The contract concerned two VIP rooms at, respectively, Galaxy Entertainment’s venues Galaxy Macau, on Cotai, and StarWorld Hotel on the Macau peninsula. Iao Kun had operated the rooms via its business partners.
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"Given the opaque nature of the VIP segment (56 percent of gross gaming revenue in first quarter 2017), forecasting Macau GGR with a fair amount of certainty is difficult; therefore, we remain cautious"