Fair Grounds, after failing to reach an agreement with Churchill Downs Inc. on a sale of the track, filed in bankruptcy court Monday evening a Chapter 11 reorganization plan that would allow for an auction of the track through the court.
All parties interested in Fair Grounds would be eligible for the auction if the court allows it. The auction could begin in 45 days. Doug Draper, an attorney representing Fair Grounds, said the auction could be completed in 90 days and the sale would close at a later date.
Draper told the New Orleans Times-Picayune
the deal offered by CDI -- reportedly $45 million with $33 million going to Louisiana horsemen to satisfy Fair Grounds' $89.9 million debt for underpayment of video poker revenue -- left no money for the track's other unsecured creditors.
Another reason a deal with CDI was not completed was Fair Grounds unwillingness to give up its appeal of the horsemen's judgement. "It's premature to think that the Fair Grounds and its shareholders have to give up their rights (before a sale)," Draper said. "It's fundamentally unfair."
Meanwhile, Fair Grounds president Bryan Krantz, whose family owns a controlling interest in Fair Grounds, still intents to keep control of Fair Grounds. One possibility is making a bid with a partner.
"We're still in here fighting," Krantz said. "We've got to do our best to protect the interest of our shareholders for the Fair Grounds and the creditors."
According to the reorganization plan, CDI could be "a stalking horse-type bidder," Draper said. In that scenario, CDI's bid would be known beforehand and would receive financial protections. The bid must be at least as high as its previous $45 million offer.
"We would like to use their bid because it brings the most money to the creditors, potentially, if it closes," Draper said. "It's the best bid out there so far."
However, a lower bid from another group that does not include any conditions could potentially be a better bid, Draper said.
Officials for CDI declined comment on the reorganization filing.
Krantz remained hopeful after the filing. "I don't know there's anything to be down about," he said. "We're still here. We still see some options and opportunities. At the end of the day we just want to see this whole mess cleaned up, and it's a very difficult task. We'll continue to work diligently to get it done."