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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. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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