The members of the steering group include Brigade Capital Management LLC, Canyon Capital Advisors LLC, the Carlyle Group, Guggenheim Investment Management LLC and Highland Capital Management LP. The group's motion comes on the heels of the denial of Fontainebleau's motion in a related lawsuit to force other lenders for the project to hand over $656 million in promised late-stage financing they refused to provide, stalling the project and leading to the Ch. 11 filing.

"With completion of the project by the debtors not possible, a sale of the project to a third party and liquidation of the remaining assets is the only viable course to realize any meaningful value for creditors," the term lenders state in their motion.

Fontainebleau, which has not responded to the motion and isn't commenting on the bankruptcy process, disclosed recently that it is in talks with potential investors, one of which is believed to be Penn National Gaming. In arguing against continuing the current process, the term lenders allege that process has been stifled due to "pervasive conflicts of interest that exist among the debtors on the one hand, and their principals, officers, managers, affiliates and related parties on the other hand."