Philadelphia Entertainment and Development Partners LP, the bankrupt limited partnership that did business as Foxwoods Casino Philadelphia (“Foxwoods”), will not be able to recover the $50 million it paid to the Pennsylvania Gaming Control Board for a slot machine license. Foxwoods planned to open a sizable slot machine facility in Philadelphia and paid for the license in 2007 before its location was final. Neighborhood opposition forced substantial delays and when Foxwoods missed a series of deadlines the Board revoked the license in December 2010.
Foxwoods filed for bankruptcy in 2014 after it unsuccessfully tried to get the license back in state court. In bankruptcy court, it brought a fraudulent transfer claim against the Commonwealth of Pennsylvania to recover the payment it made for the revoked license. The claim was initially dismissed in 2016, remanded on appeal, and then dismissed by the Eastern District of Pennsylvania on sovereign immunity grounds. Foxwoods appealed again, arguing it had a property interest in the revoked license. A sovereign immunity defense is not available in cases that further a bankruptcy court’s in rem jurisdiction. In other words, if Foxwoods had a property interest in the revoked license, the claim could move forward.
Continue Reading Recovering a Fraudulent Transfer? A Slot Machine License Is No Safe Bet.