Hoosier Park Racing & Casino’s parent company could emerge from bankruptcy early next year if creditors approve a reorganization plan that’s set for a court hearing in Delaware on Feb. 1.
Federal Judge Kevin J. Carey scheduled the proceedings earlier this month after another hearing on Centaur LLC’s plan, submitted Oct. 18. Creditors have until Jan. 19 to file written objections to the proposal.
Centaur filed Chapter 11 bankruptcy protection in March, listing assets of $584 million and debt of $681 million.
The company owns Hoosier Park casino and horse racetrack in Anderson, along with three off-track betting parlors in Indiana. Hoosier Park’s operations continue, but locally based Centaur is selling off Colorado and Pennsylvania properties to raise cash.
Both Centaur and the owners of Indiana Live racetrack and casino in Shelbyville borrowed heavily after the General Assembly in 2007 allowed the horse tracks to add slot machines in return for a $250 million licensing fee.
The slots parlors, which opened the following year, have drawn smaller crowds than projected, in part because of the recession.
Hoosier Park executive Jim Brown told the Anderson Herald Bulletin that the Indiana facility has not been affected by the legal action.
“This is a corporate debt restructuring,” he told the newspaper. “We believed it would not have an impact on our operations and to date it has not, and we don’t see any impact whatsoever going forward.”
The creditors’ committee sued in November to resolve disputes over how much collateral secures the claims of the first- and second-lien lenders. The committee argued that the lenders didn’t have a security interest in collateral securing a $50 million letter of credit accompanying an application for a gaming license. The committee also said that the lenders couldn’t claim security interests in gaming licenses.
The settlement improves the treatment of three classes of unsecured creditors. The secured creditors will realize less than one-half of 1 percent less as a result of what they gave up, a court filing says.
As a result of the settlement, second-lien lenders are to split $3.4 million in notes that pay in kind. Unsecured creditors of Valley View Downs now will receive the lesser of 50 percent paid in cash or a share of $1.5 million cash. Other general unsecured creditors also will have the lesser of half payment or sharing $650,000 in cash.
The bankruptcy judge approved the sale of the new equity to American Harness Tracks LLC. The acquisition takes effect when the plan is implemented.