New Orleans to Six Flags: Don’t Collect Insurance Funds, Take Equipment

May 14, 2009

A civil judge in New Orleans has barred Six Flags Inc. from removing any equipment, rides or other assets from its New Orleans theme park that’s still shuttered following Hurricane Katrina. The company must also sufficiently secure the property to bar against theft and refrain from collecting any hurricane-related insurance proceeds.

Six Flags has a lease agreement with the City of New Orleans for the site of its park.

Civil District Judge Tiffany G. Chase signed a 15-day temporary restraining order at the request of City Attorney Penya Moses-Fields, who maintains that Six Flags is preventing redevelopment in eastern New Orleans by not reopening the park and robbing the city of sales tax revenue and jobs the park once generated. Katrina struck the city Aug. 29, 2005.

Six Flags spokeswoman Sandra Daniels said the company would have no comment.

The city wants Six Flags to make a series of payments in exchange for the termination of its lease. Six Flags, which is $4.2 billion in debt and considering filing for bankruptcy, has said it does not intend to reopen the park. The company has continued to make lease payments to the city.

A hearing will be held May 26.

The injunction comes after the city and Six Flags failed to work out a deal that would allow the company to terminate its lease. The city has been hoping to get the theme park operator to make a series of payments in exchange for the ability to back out of the lease. Six Flags has declined to do so, saying that the city already turned down such an offer.

In 2006, Six Flags offered to pay the city $10 million, donate 86 acres of land it owns in eastern New Orleans and share with the city any future insurance proceeds it collected on the park in excess of $75 million if the mayor’s office would terminate its long-term lease.

The city rejected the deal, valued at about $14 million, because it would not have been enough to cover its HUD loan.

Information from: The Times-Picayune,

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