Wynn Resorts Ltd and its former board member Kazuo Okada are officially heading to court next year after a Nevada judge threw out the company’s bid to avoid a trial over the forced redemption of his stock at a US$900 million discount in 2012.
Wynn Resorts had argued that a July ruling in Nevada’s Supreme Court preventing Okada and the company he founded, Universal Entertainment Corp, from accessing the board’s communications with its legal team proved that courts could not question a board’s decisions provided proper procedures were followed.
Instead, Nevada District Court Judge Elizabeth Gonzalez rejected Wynn Resorts’ bid, stating that Nevada’s “business judgement” rule applied only to the protection of individual board members and not to the company itself.
It means the bitter legal feud between Wynn Resorts Chairman and CEO Steve Wynn and his former friend will continue in court in April, where Okada and Universal will argue that the Wynn Resorts board acted on Mr Wynn’s orders rather than independently when it kicked him out five years ago.
The board forcibly redeemed Okada’s 24.5 million shares worth almost US$2.8 billion and issued him a promissory note for US$1.9 billion instead, claiming his presence put Wynn Resorts’ gaming license in jeopardy amid allegations he had provided improper hospitality at Wynn properties to Philippine gaming officials to the tune of US$110,000.
The convoluted legal fight that has ensued has been further complicated this year by Mr Okada’s ousting from the board of Universal after it uncovered three instances in which he had improperly used corporate funds for his own personal gain.
Despite the fallout – including the likelihood of future litigation between the two parties – Mr Okada and Universal are still working together in the case against Wynn Resorts.
To be continued!