Mars Hotel’s Owner Files For Bankruptcy Business To Stay Open, Official Says

The Mars Hotel and Casino, which brings a Las Vegas flair to downtown Spokane, will not cash in its chips despite its owner filing for Chapter 11 bankruptcy protection.

The limited partnership that owns the restaurant and casino at Sprague and Bernard filed for bankruptcy Nov. 26. The Spokane Mars Limited Partnership has assets of $3.5 million but owes $3 million.

The partnership’s bankruptcy petition says it owes money to 138 creditors, a blend of government agencies, investors and local businesses.

“They came to a realization they aren’t going to be able to pay people in the ordinary course,” said Dan O’Rourke, lawyer for the partnership. “They needed some breathing room.”

But Robert Saucier, president of the Mars Hotel Corp., the general partner of the limited partnership, said the bankruptcy documents he signed are incorrect. The business owes less money and fewer than 100 creditors, he said.

The business is reorganizing and planning to pay back everyone, Saucier said. Filing for Chapter 11 allows a business to keep creditors at bay while its finances are straightened out.

“For us, it’s business as usual,” Saucier said. “The good news is business has not declined. As a result of this, our guests have been very loyal.”

In its petition for bankruptcy, the business said it owes $351,787 in taxes alone, ranging from $110,039 to the Internal Revenue Service to $816 to the county aquifer fund.

Saucier disputed some of the debts listed in the bankruptcy petition. He said the filing will be updated with correct numbers.

Saucier blamed the financial problems on former management. Billy Anders was president of the management company, Mars Hotel Corp., until July 14, when he was terminated, Saucier said.

Anders also was general manager of the business, Saucier said.

“He was the one who signed the checks, hired and fired the people and made the management decisions,” Saucier said. “Upon doing some auditing of the books, I discovered that a lot of obligations to creditors and government agencies were not met.”

Anders sued Saucier, the Mars Hotel Corp. and the limited partnership in October, alleging breach of contract. He was awarded a default judgment of about $280,000.

Anders said he didn’t want to point fingers. But he said Saucier, who has lobbied extensively for expanded gaming at the casino, has been an integral part of the business.

“Mr. Saucier has been CEO of the company since Day One, an integral part of the strategy, the maker of the strategy,” Anders said.

“I have no comment to make. It’s his company.”

The company actually is a web of companies.

Saucier declined to name the limited partners of the Spokane Mars Limited Partnership. But he said he was not a limited partner.

The partnership probably won’t own the hotel and casino much longer. A company called Zephyr Cove Capital will lease the property, and the manager of Zephyr Cove will be a Nevada corporation called Galaxy Gaming, with Saucier as the president.

“It’s a completely different deal,” Saucier said. “It’s not switching it from the left hand to the right hand.”

Zephyr Cove will pay rent to the Spokane Mars Limited Partnership, which will use that money to pay off its debts.

The new company will have to get licenses from the state Gambling Commission and state Liquor Control Board.

The Mars also has other changes in store. The II Moon Cafe will be closed Sunday. On Monday, a restaurant will open called Scarlet Begonias, which will feature upscale French fare, Saucier said.

Next, the Mars will come up with a plan to pay off taxes to eight government agencies and six secured claims to investors and lenders. Then the company will tackle the remaining unsecured claims, mostly bills.

“They just need time to analyze their debts and work out a schedule to pay their debts,” O’Rourke said.

Government agencies have targeted the business. The city of Spokane is clamoring for $87,503 in back gambling taxes, although Saucier pegs the amount closer to $60,000. The state Liquor Control Board also is threatening to yank the company’s liquor license over alleged liquor violations.

“I understand hardships in business,” said Robert Nelson, a friend of Saucier’s and an investor owed $69,420. “He’s trying. He’s trying to do his best. I think that it’s a profitable idea, especially with the growth in gambling.”

The Mars Hotel opened its eclectic gourmet restaurant in 1994. Later, the company opened a downstairs bar called the Ugly Rumors Lounge that featured live music and dancing.

But there is no more live music. A casino, originally tucked into a corner of the lounge, now spills onto the dance floor.

Investors such as Nelson said they either didn’t know about the bankruptcy filing or only had heard rumors. They said they hope the business can come back stronger.

“I’ve known Rob Saucier for a long time,” Nelson said. “He’s got some great ideas, and he’s been successful in other ventures. … I knew going in that it was a high-risk venture.”

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MEMO: Two sidebars appeared with the story: 1. Changes The II Moon Cafe on Monday will be renamed Scarlet Begonias, which will feature upscale French fare. Next, the Mars will come up with a plan to pay off taxes to eight government agencies and six secured claims to investors and lenders. Then the company will tackle the remaining unsecured claims, mostly bills.

2. Claims against the Mars Here is a list of agencies, businesses and people owed more than $25,000 by the Spokane Mars Limited Partnership. The partnership will pay priority and secured claims first, then unsecured claims. Robert Saucier, president of Mars Hotel Corp., disputes some of the amounts, although he signed the original bankruptcy petition. $833,750 owed to Sherron and Associates in Bellevue, Wash., for a second mortgage. Secured claim. $779,875 to Cyrill Randall in Bothell, Wash. Secured claim. $551,785 to Empire Securities in Spokane. Secured claim. Saucier said no money is owed. $227,000 to Billy Anders, an investor and former manager at the hotel’s Ugly Rumors Lounge. Unsecured claim. Saucier said only $1 is owed. $110,039 to the Internal Revenue Service. Priority claim. $100,806 to the state Department of Revenue. Priority claim. $87,503 to the city for gambling taxes. Priority claim. Saucier estimates the debt at between $60,000 and $70,000. $45,525 to Robert Saucier. Secured claim. $38,638 to International Design in Spokane. Unsecured claim. $38,101 to Carter-Welsh, doing business as Garco, in Spokane. Unsecured claim. $37,268 to Robert Nelson in Spokane. Secured claim. $33,974 to the state Department of Labor and Industries. Priority claim. Saucier said the amount is $8,100. $32,550 to Food Services of America in Spokane. Unsecured claim. $32,152 to Nelson Securities, owned by Robert Nelson, in Spokane. Secured claim.