Majestic Star Casino LLC, which operates side-by-side riverboats in Gary, filed for bankruptcy Monday, according to media reports.
Court documents showed the move came after months of talks failed to produce an agreement on restructuring its defaulted debt, Reuters reported.
Gary Mayor Rudy Clay said Monday his administration will continue to work with Don Barden, owner of Majestic's parent, Barden Development Inc., which is not part of the bankruptcy.
"We're going to work together to get a land-based casino in Gary," Clay said.
Clay said Barden still owns the Indiana gaming licenses for the two Majestic Star casinos in Gary, "and we're still working with Don Barden."
The company had been unable to pay debts and invest in its locations as competing casinos expanded and the economy continued to lag.
Recent talks broke down and forced the company to file for court protection to prevent creditors from foreclosing on its operations, according to Reuters.
The gaming company and seven affiliates seeking protection listed assets of $402.1 million and liabilities of $771.1 million as of Oct. 31.
Along with the two lakefront casinos in Gary, the company operates a hotel and casino in Tunica, Miss., under the Fitzgeralds name as well as a Fitzgeralds casino near Denver.
Barden recently lost control of a casino in Pittsburgh after it ran into money problems, Reuters reported. The Pittsburgh Post-Gazette reported that a grand jury is investigating the decision to award the gaming license to Barden.
Majestic Star Casino LLC last month received a default notice from the lenders of a $79.4 million loan. The casino company and its subsidiaries already were in default with two sets of bondholders after missing a $24 million interest payment in October 2008, and two subsequent interest payments this year.
