Court rejects Foxwoods bid to recoup $50M fee

Lawyers for the defunct Foxwoods casino project in South Philadelphia lost their bid in bankruptcy court to recoup the $50 million license fee Foxwoods paid in 2007.

In a 64-page ruling Friday, U.S. Bankruptcy Judge Magdeline D. Coleman rejected the Foxwoods group's arguments under bankruptcy code and said she did not have jurisdiction over certain other counts, which belong in state court.

A lawyer for the Foxwoods group - formally known as Philadelphia Entertainment & Development Partners L.P. - said he would recommend that his client appeal the bankruptcy issues to U.S. District Court for the Eastern District of Pennsylvania.

"We have some issues with some of the court's holdings and conclusions," Fred Jacoby, vice chairman of Cozen O'Connor, said Wednesday.

Jacoby said the firm had not yet decided whether to recommend that the Foxwoods group return to state court, where it already received an unfavorable ruling from Commonwealth Court in 2011.

The Pennsylvania Department of Revenue, the party sued by the Foxwoods group, said it was pleased by Coleman's decision. "Two courts have now decided in favor of the commonwealth, and we hope this puts the matter to rest," the department said in a statement.

The dispute dates to December 2010, when the Pennsylvania Gaming Control Board revoked the license for the proposed Foxwoods Casino, after its backers failed to get the project off the ground in the four years since it had been awarded the license.

Two years ago, the Foxwoods group filed for bankruptcy protection as part of a strategy to recoup the $50 million fee, which the state kept after revoking the license.

Under the plan, first in line to be paid - up to a certain point - would be law firms owed $10 million from years of work on Foxwoods. The law firm creditors were led by Cozen, owed $6.46 million.

The main local investors in the Foxwoods deal included the late Comcast-Spectacor chairman Ed Snider, and family charitable trusts for developer Ron Rubin and the daughter of the late Lewis Katz. Katz was one of the owners of Philadelphia Media Network, which publishes the Inquirer, the Philadelphia Daily News, and Philly.com.

Source: Philly.com