(Lukas Gojda)

The owner of the once-proposed Foxwoods Casino, which entered bankruptcy earlier this week, has asked the bankruptcy judge to allow Cozen O’Connor to represent the entity in recovering the $50 million fee it paid for a casino license that was later revoked.

In an application to authorize Philadelphia Entertainment and Development Partners to hire Cozen O’Connor, PEDP said it believed it had a claim to the $50 million licensing fee given the 2008 license to operate a casino in Philadelphia was revoked in 2012 and the Pennsylvania Gaming Control Board is expected to receive another $50 million for the same license from whichever entity wins the bid for the license PEDP once held.

According to an engagement letter attached as an exhibit to the application, PEDP intends to pursue its claim against the commonwealth of Pennsylvania and the state secretary of the Department of Revenue.

PEDP and Cozen O’Connor have entered into an engagement agreement in which Cozen O’Connor Chairman Stephen A. Cozen and Vice Chairman F. Warren Jacoby would lead the firm’s representation of PEDP as special litigation counsel for the sole purpose of recovering the fee. Under the agreement, Cozen O’Connor would be paid a nonrefundable $50,000 deposit toward fees and PEDP would pay all costs associated with the representation. The rest of the firm’s work would be done on a contingency fee basis in which the firm would receive 25 percent of any recovery it helped achieve.

In a declaration in support of the application, Jacoby said his firm is well suited for the job given its history of representing PEDP in the license application and revocation process as well as its representation of existing Philadelphia casino SugarHouse.

As part of its prior representation of PEDP, Cozen O’Connor noted PEDP owes the firm $6.5 million in unpaid legal fees. Cozen O’Connor is the second largest unsecured creditor of PEDP behind RBS Citizens Bank, according to filings in the bankruptcy court. Jacoby said in his declaration that the unsecured claim did not create any adverse interest to PEDP. Cozen O’Connor partner Neal Colton entered his appearance in the case on behalf of the law firm in the firm’s role as an unsecured creditor.

As per course in applications to be retained as counsel in a bankruptcy, Cozen O’Connor noted other potential conflicts, but determined they did not create any adverse interest to PEDP.

The firm said it provides legal services to SugarHouse owner HSP Gaming, casino owner Valley Forge Convention Center Partners and Market East Associates, one of the current applicants for the license taken away from PEDP.

Cozen O’Connor also noted its CEO, Michael Heller, owns a 0.4 percent stake in Market East and is the secretary of its general partners. Heller also owns a 12.6 percent stake in Valley Forge Convention Center Partners. The firm said Cozen owns a “de minimis” interest in HSP of approximately 0.5 percent.

Former Cozen O’Connor CEO Thomas A. “Tad” Decker was formerly the chairman of the Pennsylvania Gaming Control Board. Decker and partner Ira Gubernick currently represent Delaware Lottery in connection with Delaware’s negotiation of a multistate Internet gaming agreement, according to the declaration.

When Gubernick was at Klehr Harrison Harvey Branzburg, he represented Washington Philadelphia Investors, a limited partner of PEDP. Gubernick has also represented Cira Pittsburgh Gaming Investor, a minority investor in Pittsburgh-based Rivers Casino, according to the declaration.

The application to employ Cozen O’Connor was filed by attorneys Stuart M. Brown and Carl Buchholz in DLA Piper’s Wilmington, Del., and Philadelphia offices, respectively, and Thomas R. Califano and Daniel G. Egan in the firm’s New York office.

The case was filed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania and has been assigned to Judge Magdeline D. Coleman.

PEDP’s bankruptcy filings show just how much gaming has meant for legal work in Philadelphia. Of the company’s 15 largest unsecured creditors, five are law firms.

Aside from the nearly $6.5 million owed Cozen O’Connor, Klehr Harrison is owed $1.26 million, Obermayer Rebmann Maxwell & Hippel is owed $940,000, Blank Rome is owed $812,000 and Eckert Seamans Cherin & Mellott is owed $678,000, according to court filings.

In December 2011, Obermayer Rebmann filed suit against Foxwoods Development Co. (FDC) seeking nearly $1 million in unpaid fees. FDC responded that Obermayer Rebmann sued the wrong entity. FDC said the law firm should have been suing PEDP, a separate entity composed of FDC and individual investors. FDC said Obermayer Rebmann signed a separate fee agreement with PEDP after FDC formed the joint venture and that any fees generated from that point were PEDP’s responsibility, according to court filings.

The case had been continued several times. Most recently, FDC filed a motion for sanctions against Obermayer Rebmann for failing to withdraw its complaint against FDC and file it against PEDP. But FDC withdrew the motion after the Philadelphia trial judge denied its motion for summary judgment, according to court filings.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.