The parent company of the Indiana Live racetrack and casino in Shelbyville announced Thursday morning that it is reorganizing under Chapter 11 bankruptcy protection.
Indianapolis Downs LLC filed the bankruptcy petitions in the U.S. District Court for the District of Delaware.
Both of Indiana’s racetrack-casinos now have declared bankruptcy. Indianapolis-based Centaur LLC, owner of Anderson’s Hoosier Park & Casino, is emerging from bankruptcy after gaining approval for its reorganization plan in February.
The two borrowed heavily to pay the $250 million state-mandated slots-license fee and to build their gambling facilities. They say steep state tax bills also have dragged down results.
Meanwhile, Indianapolis Downs said in a press release that it generates enough revenue to pay expenses but is operating under a debt burden significantly greater than anticipated.
Indianapolis Downs attributed much of its financial distress to the $250 million fee.
The company’s overall debt totaled $544 million as of 2009, the most recent period available.
“This filing is unlike many debt restructuring cases because Indianapolis Downs has steadily grown its revenue and market share since operating,” said Gregory F. Rayburn, Indianapolis Downs’ chief restructuring officer, in a written statement. “Indiana Live and Indiana Downs racino is an operationally profitable but new business that has not yet achieved its full potential.”
Indiana Live brought in $244 million in 2009, according to a financial audit. But the revenue stream hasn’t been enough to cover expenses, which include massive interest payments.
At least two other operators have shown an interest in buying the struggling racino.
In November, Standard and Poor’s downgraded Indiana Live’s credit rating to D after the company missed an interest payment.
Both the racetrack and casino will continue to operate as usual during the restructuring and there should be no interruption in services, the company said.
Indiana Live’s controlling shareholder is South Bend-based Oliver Racing LLC.