Wells Fargo drops lawsuit against Chukchansi tribe over $250 million debt. Here’s why
Wells Fargo Bank has dropped its lawsuit in connection with a $250 million loan to the Chuckchansi Gold Casino and Resort.
News of the settlement came last week in a statement from the Chukchansi Economic Development Authority, a defendant in the lawsuit along with the Chukchansi Finance Company, LLC. The two groups were accused of mishandling money meant to pay off the tribe’s debt.
As a plaintiff in the lawsuit, Wells Fargo asked a New York state judge to award monetary damages and declare that the tribe’s economic authority violated the terms of a $250 million loan issued to the tribe in 2012.
The loan was issued to refinance debt from the Chuckchansi Gold Casino and Resort. The bank and the tribal organizations agreed on a debt restructuring deal. It came with the requirements that the economic authority would create an account that it can use to fund the casino’s operations, make payments on other reopening loans, and make certain tribal member distributions.
Any cash left over was expected to go toward semi-annual payments to Wells Fargo.
But the bank later accused the tribe of stockpiling cash and alleged in the lawsuit that the tribe unlawfully cut off loan repayment agreements and diverted money from a fund set up to repay other lenders instead of the bank.
The tribe, which has been involved in previous lawsuits over debt, argued in a statement last year that it had fulfilled its agreements, and the lawsuit was unnecessary.
That litigation was averted, but the restructuring of the economic authority’s debt continues. A statement issued by the economic authority says the settlement agreed to by a majority of noteholders will reduce the economic authority’s debt by $125 million.
The chairwoman of the economic authority, Claudia Gonzales, said the settlement would help strengthen the tribe’s economy.
The groups are now seeking court approval of the settlement.
