Hawthorne filed for bankruptcy on Feb. 28 after a succession of financial setbacks led its bank, Signature Bank, to freeze the track’s accounts. That led to Hawthorne’s checks to riders and others being bounced unpaid and a decision by the Illinois Racing Board to suspend the license of Hawthorne’s hard-sports entity, Suburban Downs.
In the filing, Hawthorne listed millions of dollars in debt to simulcast partners, contractors and others.
Since then, the track has arranged $16 million in interim financing as part of an eventual reorganization plan and asked Judge Timothy Barnes during the initial hearing to approve that transaction and authorize specific expenditures to prevent “immediate and irreparable harm.”
Among those requests was funding to pay past dues and other fees for Thoroughbred and Horsemen and to prepare the track for a Thoroughbred meet scheduled to begin March 29. Without settling those debts, the track and riders said, owners and trainers will not ship horses to race at the track in suburban Chicago.
“Will the purebloods flee again unless they are healed?” asked Hawthorne President and CEO Tim Carey. “No.”
“We have hundreds of riders across the country delaying their decision (where to race) based on this hearing today,” Carey said.
He added that the failure of the race meeting could result in Hawthorne losing its racing license and the company without a racing license would lose its long-dormant right to open a racino at the track, which would hurt the overall value of the property.
The more than six-hour hearing wandered deep into the weeds of the bankruptcy code and delved into details of the circuit’s operation, with some pre-bankruptcy creditors objecting to parts of the circuit’s petition and proposed reorganization budget.
Signature Bank attorney William Thorsness questioned Hawthorne officials about the need for immediate funding release, the validity of the assumptions underlying the proposed budget, and other details.
But at the end of his questioning, Thorsness added: ‘The bank doesn’t want to close the company. That is not the intent of our objections in this hearing today.”
Barnes identified the most urgent item as paying Hawthorne’s employees. He adjourned the initial hearing without taking final action on any requests, but set a new hearing for March 4 to consider approving the payroll.
And he said he recognizes the need to meet obligations to riders.
“I’m not hearing these things for the first time,” he said. I grew up in a running town (in southern Ohio, he later confided) and my son goes to school in Saratoga Springs.
“I’m motivated to get the riders paid. But I don’t think it has to happen right away.”
He set a third hearing for March 10 to consider these and other approvals and authorizations.
“We are disappointed that we did not receive a resolution today,” said Chris Block, president of the Illinois Thoroughbred Horsemen’s Association. “But we are encouraged that the judge has said that he has our interests at heart.”
Barnes added: “I hope the riders can be encouraged that the court is looking out for them.”
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