Yahoo Finance Will Diamondhead Casino Corp. be forced into bankruptcy or find a resort developer?
The continuing saga of trying to build a casino resort in Diamondhead raged on this week.
On Wednesday, creditors filed a lawsuit in federal court to force Diamondhead Casino Corp. into bankruptcy, Law 360 reported.
The involuntary bankruptcy petition against the company was filed in Delaware bankruptcy court by a group of creditors who said the company owes them $2.4 million. Argonaut Partners and Emerson Partners are among the creditors claiming unpaid debts ranging from $161,000 to $743,000, according to the petition.
On Thursday the company sent out a press release saying it hired Colliers to help market and finance a casino along I-10, or to sell all or part of the site. The contract runs through the end of the year unless it is extended.
Diamondhead Casino Corp. has tried since 2000 to build a casino resort along I-10 in Hancock County. It would be the first casino in South Mississippi with direct access from I-10 it were built, and would be 30 miles closer that the casinos in Biloxi for those coming into the state from Louisiana or Texas.
“The Company has had no operations since it ended its gambling cruise ship operations in 2000,” according to the latest quarterly report.
This isn’t the first time a lawsuit was filed to try to force an involuntary Chapter 7 bankruptcy. In August 2015, a group of stockholders, who also are creditors, filed to put the company into Chapter 7 bankruptcy.
That case was dismissed by U.S. Bankruptcy Judge Laurie Selber Silverstein, who ruled the creditors were using the Chapter 7 filing to seek a change in company management, something they could have pursued in Delaware state court.
It’s also not the first time Diamondhead Casino Corp. hired a company to try to find a partner to help build the resort. Most recently, in December 2023, reported it hired a commercial real estate brokerage firm to sell all or part of the property or to find an equity investor.
The company said the property has two miles of frontage on the Bay of St. Louis, has 18 million vehicles a year pass the property, has the correct zoning and was granted site approval in 2014 by the Mississippi Gaming Commission for a 50-acre site on the east side of the property.
But that hasn’t been enough to seal the deal for the property that caught the eye of Donald Trump in 2006, following Hurricane Katrina, and other developers who also pulled out of their potential deals.
Casinos Austria International Holding was interested in developing the site before the recession began locally in 2009.
Phoenix Gaming and Entertainment LLC later signed a letter of intent to buy 25 acres for $1 million an acre to build a casino, but the deal ended in 2011 when Phoenix was unable to secure financing for the project.
Unable to find a partner or get financing to build a casino, the owner put the property up for sale in 2019.
“The only reason we put it up for sale is we owe people money and we have to pay them,” said Deborah Vitale, Diamondhead president.
Vitale said she envisioned a large mixed-use resort with a boardwalk along the water and plenty of acres for a variety of amenities, including airports at Diamondhead, Gulfport and New Orleans.
