PROVIDENCE — The owners of the Twin River track-and-slot parlor appeared poised to file a petition for U.S. Bankruptcy Court protection from their creditors on Monday, then pulled back at the last minute.

Spokeswoman Patti Doyle said she received a late-night telephone call telling her that talks were back on with Twin River’s lenders, and legal counsel had recommended they “delay” the bankruptcy court filing, at least for now.

Earlier in the day, Doyle said that the firm would be filing for Chapter 11 bankruptcy protection from their creditors, which include both New York financial houses and a phalanx of unpaid local builders, electricians and dry-wall installers.

For weeks now, the owners have been sending out increasingly urgent warnings that they would have no other choice if the state failed to make financial concessions, such as sharing marketing costs and backing their plans to suspend a money-losing end of their business — live greyhound racing — on Aug. 8.

The Carcieri administration has said no to the owners’ overall proposals.

With the state counting on Twin River to produce close to $246 million in revenue this year alone, the potential impact of the bankruptcy filing is of enormous significance to the state.

Twin River’s lawyers had been scheduled be in U.S. Bankruptcy Court at 11 a.m. making motions related to the continuing operations of the sprawling gambling hall that formerly was Lincoln Park.

It was expected that a judge would be asked to approve an interim budget that enables the owners to keep Twin River operating and pay their hundreds of employees, according to Doyle.

Beyond that, it is not yet clear what the filing might mean to the operation, despite assurances that the slot parlor will remain open as usual, and what actions Twin River’s lenders — and the state — may take in response to the filing.

While Twin River would not be the first gambling enterprise to sink into bankruptcy, it has a relationship with the state of Rhode Island that raises unique legal questions since the state not only controls its operating license but also the 4,751 video slots and virtual blackjack machines placed there by the state Lottery that are its big moneymaker.

Under this arrangement, the state gets all of the money on hand each day, takes each share and then divvies up the amounts owed each of the other “partners” in this Lottery-sponsored slot operation, including Twin River’s owners. And this will probably continue, though Gary Sasse, speaking in his capacity as Department of Revenue director last July, acknowledged that even then “additional measures [had] been put in place to ensure protection of state funds in the event of a bankruptcy filing or possible interruption of transfer of funds.”

That included posting a Lottery representative in the Twin River money room to examine the deposit slips and observe the physical pick-up of the money by an armored car service.

Asked why the state had taken these steps, Sasse said: “It’s obvious. We are exercising what we believe to be appropriate due diligence. We are confident that the business is strong. But we certainly have an obligation to the taxpayers to prepare for all contingencies.”

With Twin River in default on more than a half-billion dollars in loans, the imminent bankruptcy filing is not a surprise.

Last September, Moody’s Investors Service downgraded the company’s creditworthiness, citing the high probability of bankruptcy.

Asked at the time if the downgrade reflected concern that Twin River, though profitable, would not produce enough earnings to meet its obligations on $565 million in loans, Moody’s vice president and senior credit officer Peggy Holloway said: “Yes.”

Holloway said “the state has — and I think it is pretty well known — a pretty onerous tax rate, and this property has produced a far lower level of revenues and earnings than was anticipated at the time the project was started.”

She said the owners assumed “a greater earnings potential than it is demonstrating,” raising “the probability the company will experience a distressed exchange or a bankruptcy.”

In a bankruptcy, Holloway explained, “everything stops … the brakes are put on and the court says ‘can we sort this out?’ ”

In a distress exchange, she said, the lenders “agree to basically hand in their existing notes in exchange for new notes that have less beneficial economic terms. It could be they agree to reduce the principal amount. They agree to reduce the interest. They extend the maturity … in other words, the deal they signed up for isn’t the deal they wind up with.”

Twin River is run by a subsidiary of BLB Investors, a holding company composed of Kerzner International, Starwood Capital Group and Waterford Group LLC. The company bought the Lincoln Park dog track in 2005, along with three greyhound racetracks and a horse track in Colorado, and then embarked on a $225-million renovation and expansion.

Two of the principals were original developers of the Mohegan Sun casino who, more recently, have been the primary financial backers of the Mashpee Wampanoag Indians’ attempt to open a casino in Middleboro, Mass.

Starwood Capital is a holding company for the investments of many pension funds across the country, though not Rhode Island’s.

The first sign that Twin River’s owners were in financial trouble came in March 2008, when they missed a loan payment to their lenders, led initially by Merrill Lynch Capital Group, JPMorgan Chase and Deutsche Bank.

The lenders gave the owners a series of reprieves under terms that allowed the company to suspend payments to some lenders. But that last forbearance agreement lapsed in January, and months of behind-the-scenes talks between negotiators for the state, the lenders and BLB failed to bear fruit.

Last week, The Journal obtained a copy of the financial recovery plan the owners had pitched to the governor’s emissaries.

It included their previously announced plan to end the dog racing to save $10 million annually, and a request that the state take up to $28 million off the top — before the state, the owners or anyone else gets a share — to help cover the cost of marketing the Lincoln gambling hall, an additional $12 million for capital expenditures and $16 million for a player-rewards program.

Twin River would also have bought out the state Lottery’s leases for the 4,751 video-slot machines in play now, with Twin River’s owners getting most of the revenue the state is currently paying GTECH and the other machine suppliers.

But the Carcieri administration passed. Asked why, spokeswoman Amy Kempe said: “In a nutshell, under the proposal by BLB there is a very real chance the state could lose money. It’s backdoor tax relief.”

kgregg@projo.com