Will the deepening recession and skittish lending environment find their next victim in CityCenter? The Las Vegas development faces mounting challenges in reaching completion.

The project, touted as the nation's largest privately funded development, has been trying unsuccessfully for months to secure a $1.2-billion loan needed to finance the final leg of construction. Majority Leader Sen. Harry Reid (D-Nev.) and Sen. John Ensign (R-Nev.) have reportedly made calls to banks on the project's behalf.

The $9.2-billion resort complex was scheduled to open in December.

On Mar. 23, however, developer MGM Mirage was slapped with a lawsuit by project partner Dubai World, a conglomerate owned by the Dubai government, who wants out of the deal. The timing couldn't be worse. MGM Mirage is cash-strapped and struggling under a $13-billion debt load. On Mar. 17, the gaming giant reported a $1.15-billion fourth quarter loss amid a 17% drop in gaming receipts and 21% room occupancy decline. It additionally has $1.2 billion in bond payments due later this year as well as $650 million in interest payments.

Dubai World's lawsuit filed in Delaware Chancery Court signals that it probably won't make a $100-million progress payment on CityCenter due Mar. 27. Failure to do so could imperil the project and result in work stoppage by general contractor, Perini Building Co., a unit of Perini Corp., Framingham, Mass.

Dubai World asked the court to free it from making payments and other obligations outlined under its MGM Mirage partnership. It's seeking unspecified damages. Dubai World bought a 50% stake in CityCenter two years ago for $5-billion, plus a 9.5% interest in MGM Mirage. But it now blames MGM Mirage for project mismanagement and $2-billion in cost overruns, despite being scaled back. It additionally claims that comments contained in MGM Mirage comments in its annual report violate partnership terms. The lawsuit is "completely without merit," MGM Mirage responded in a statement.

The gaming giant, meanwhile, which operates 10 casinos in Las Vegas, has been racing to shore-up cash reserves. In December, the company sold its Treasure Island Resort on the Strip to casino mogul Phil Ruffin for $775 million. In February, it drew down the remaining $842 million of its revolving credit facility. Despite this, MGM Mirage warned that it could default on loans as soon as mid-May. Options could include selling resort properties, or working out a deal with bondholders to turn over properties in exchange for eliminating its debt, analysts say.