The Nooksack River Casino closed Thursday night, Dec. 10, and won’t reopen. River casino.
It appeared little warning was given to the community or to the employees before the casino in Deming was shuttered.
A sign posted on the door to the casino Friday, Dec. 11, said it would be announced soon how and when people could cash in tickets and chips, and to check the casino’s Facebook page.
The Nooksack Northwood Casino, also owned by the Nooksack Indian Tribe, remains open.
The tribe had been in court with lenders for years over millions in unpaid debts that were used to renovate the River casino, making the building’s future unclear.
The casino was renovated using about $15 million in loans that the Nooksack Business Corp., an entity owned by the roughly 2,000-member tribe, made payments on for only a year before going into default.
The legal process between banks and the tribal entity started early in 2011, lasting through this year partly due to questions of whether local courts had jurisdiction over the case.
In June, Nooksack Indian Tribal Chairman Bob Kelly called the first public meeting in roughly three years to tell members of the possible closing of the casino.
But it appeared that lenders would try to work with the tribe to keep the business open in an attempt to get back more than $20.7 million in loans and fees.
Whatcom County Superior Court Judge Deborra Garrett gave a verbal ruling in June that Outsource Services Management, a loan servicing company, could collect on enterprise accounts and revenues of all commercial activities on the premises that were funded by the loan.
Lawyer Jerry Miranowski, representing Outsource, said the company was not expecting the casino to close.
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“We had an expert take a look at the operations and finances of the casino and that expert’s opinion was, with some changes, the casino could be very profitable,” Miranowski said. “Unfortunately the tribe hasn’t shown any interest in making changes or even talking about them.”
Neither Kelly nor a lawyer for the tribe returned phone calls requesting comment for this article Friday, Dec. 11.
Employees said they were not able to talk about the closure for this article.
Gaming law prohibits non-tribal entities from managing tribal casinos, which Nooksack has pointed out in legal arguments disputing Outsource’s requests to collect on revenues.
There’s no reason the casino should not be able to make money and pay off its loans while continuing to provide employment and possibly money for the tribe’s use, Miranowski said.
“The issue of managing the casino is ultimately for the tribe to decide, that’s very clear from the law,” Miranowski said. “We just think it’s a shame that nothing more was tried here to benefit everybody.”
Under the loan agreement, the tribal entity was to deposit all revenues to a depository account that would ensure operating expenses would be protected from garnishment, according to a Nov. 9 Whatcom County Superior Court order.
The casino didn’t do that.
The loan agreement’s protections were based on those deposits being made, and since they were not, Outsource is allowed to collect on “pledged assets” including other bank accounts the casino has, even money set aside for operating expenses, according to court documents.
On Friday, Dec. 4, a court order allowed Outsource to start collecting on the unpaid debts.
Wednesday, Dec. 9, the company submitted a writ of garnishment on the casino’s bank accounts.
“Frankly, we needed to get the tribe’s attention,” Miranowski said.
During last week’s hearing, it was decided the two parties would meet in court again Dec. 18 to discuss what would be done in the event the casino were closed.
Outsource has said even if the building were converted into another business, the company still could collect on the unpaid amount.
“It’s our position that we’re entitled to any revenues that that facility generates, whether they’re from gaming or otherwise,” Miranowski said.
Back in April, lawyer Connie Sue Martin, on behalf of the tribal corporation, argued in court that Outsource had failed to show the casino had actually made any money on top of what it deemed necessary for daily operations, and therefore had failed to show that anything was owed under the terms of the loan.
The tribal corporation asked for a ruling at that time on what the consequences of closing its casino would be.
“It’s an inescapable truth that the River will never, ever generate sufficient revenue to repay the original balance of the loan, much less the additional almost $6 million OSM contends has accrued in penalties, interest and fees,” the corporation’s court documents state. “It cannot be questioned that OSM would not have the right or authority to compel NBC to continue operating the casino simply to pay a judgment to OSM.”
In court at the time, Martin said, “If we close the casino and turn over all the property, then it’s done.”
Outsource requested and was granted an order at the time preventing the tribal corporation from transferring its assets to another entity as it had done with its other casino.
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In 2012 when Outsource tried to get the tribe’s other casino, Northwood, which was then Northern Crossings, to pay back roughly $26 million it had borrowed from a different bank for design and construction, the tribe dissolved its ownership entity Nooksack Business Corp. II and transferred all that casino’s assets to another entity to effectively prevent Outsource from collecting its debts, court documents allege.
No notice given
Though it has been clear for a few years the casino-lender relationship was rocky, no immediate notice was given before the casino’s closure Thursday night.
Typically, employees are supposed to be given 60-days notice of a closure if their business has more than 100 employees and plans to close or have layoffs, under a federal program called the Worker Adjustment and Retraining Notification Act.
The WARN act was passed to provide workers and their families transition time to adjust to the potential loss of their job and look for other work or training, according to the U.S. Department of Labor.
However, federally recognized Indian tribal governments are not required to provide those notices.
The casino employed 126 people as of Sept. 15, according to Outsource.