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Shelbyville casino could exit bankruptcy in August

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Indianapolis Downs LLC, the operator of a horserace track and casino in Shelbyville, could exit Chapter 11 at the end of August, under procedures approved Thursday by the U.S. Bankruptcy Court in Delaware.

The track’s owner filed a reorganization plan in April that was negotiated with second-lien creditors and Fortress Investment Group LLC. The plan calls for selling the facility if the price is acceptable to the second-lien creditors. Otherwise, the plan will give ownership mostly to second-lien lenders.

Indianapolis Downs fielded several offers for the property earlier this year, but they weren’t high enough to suit the troubled company or its creditors.

On Thursday, the bankruptcy judge approved the disclosure statement explaining the plan. The judge also gave his stamp of approval for auction procedures. The disclosure statement provides pertinent information about the plan.

Bids must be submitted by July 20, and an auction will be conducted on July 31 if acceptable bids are offered. Although prospective buyers have been negotiating and submitting offers, none so far is acceptable to the second-lien lenders, according to the disclosure statement.

Creditors can't vote on the plan until July 31. The confirmation hearing for approval of the plan is set for Aug. 22.

The plan provides that if there isn’t a third-party buyer, the loan of about $100 million financing the Chapter 11 case will be paid off. Second-lien lenders will receive a new second-lien term loan, 95 percent of Class A warrants, and 95 percent of a new unsecured term loan paying interest with more debt. If there is an acceptable sale price to a third party, second-lien creditors will receive the proceeds, less an agreed amount earmarked for third-lien creditors.

If there is a sale, third-lien creditors are to receive the agreed amount from second-lien creditors plus the surplus if the second-lien is fully paid. Absent a sale, third-lien creditors will receive 5 percent of the new unsecured term loan, 5 percent of the Class A warrants, and all of the Class B warrants.

Unsecured creditors, with claims that may total from $9 million to $24 million, are not to receive anything.

The track missed an interest payment in November 2010 on $375 million in second-lien notes. The reorganization begun in April 2011 is being financed with a $103.1 million loan from the existing first-lien lenders, with Wells Fargo Bank NA as agent. Secured liabilities of the so-called racino include $98.1 million owing on the first-lien financing, $375 million outstanding on the second-lien notes and $72.7 million on third-lien subordinated notes.

The Indiana Downs track opened in 2002. The casino began operations in 2008. The permanent facility opened in March 2009 with 2,000 slot machines and electronic table games. Revenue in 2010 was $270 million.

The petition says assets are more than $500 million while debt is less than $500 million.
 

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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