Bid Process Ordered for Curlin Interest
A Kentucky state judge signed an order Sept. 25 that could possibly pave the way for the minority interest in defending Horse of the Year Curlin to be sold by sealed bid.
The order, which was signed by Franklin County Special Judge Roger Crittenden following a two-hour hearing, allows the court-appointed receiver for the operator of Curlin’s minority owner, Midnight Cry Stable, to immediately begin the sealed-bid process.
The intent of the order is to help the receiver establish a “maximized value” for the 20% interest owned by Midnight Cry Stable’s parent, Tandy LLC, but could also result in the ultimate sale of the minority ownership if certain criteria are met. Curlin, who is owned in an 80% majority interest by Jess Jackson’s Stonestreet Stables, is scheduled to run Sept. 27 in the Jockey Club Gold Cup Invitational (gr. I) at Belmont Park.
“That is something that would have to meet both the receiver’s acceptance and the court’s acceptance,” Sylvius H. von Saucken, counsel for interim receiver Matthew Garretson, said about any sale resulting from the sealed-bid process. “Stonestreet has a right to bid, as any other qualified bidders also have the right to bid. But Stonestreet also has rights under the co-ownership agreement that makes this situation particularly unique process.”
Under terms of the 2007 purchase of Curlin from Midnight Cry, the majority owner retains a right of first refusal on any sale of the minority interest.
The receiver in July was given charge of managing Tandy’s interests, and a subsequent recent motion filed on behalf of the receiver asked Crittenden to help establish a value for the colt by use of the sealed-bid process.
The sealed-bid process could be marketed through one of the major auction houses, such as Keeneland or Fasig-Tipton, according to courtroom discussion, but von Saucken declined to confirm after the hearing which sale companies have been contacted.
“We have contacted representatives from the world’s largest auction house to potentially assist us, subject to the marketing costs,” he said. “And we have contacted another company, each of whom would be well-recognized in the equine industry."
Immediate attempts to reach officials with either Keeneland or Fasig-Tipton were unsuccessful following the hearing, which ended at about 4 p.m. (EDT).
A decision to retire the 4-year-old son of Smart Strike may hinge on the outcome of the sealed-bid process, according to courtroom discussion.
“My clients, as the 80% owners, are being infringed upon because of problems with ongoing litigation,” Richard Getty, an attorney representing Stonestreet Stables, argued before Crittenden. "My client has already been harmed by not already divesting this interest. The large farms are not interested."
“Mr. Jackson is saying we may race the horse next year, because we are forced to,” Getty said, terming Midnight Cry Stable’s ongoing presence as an “albatross” at one point. “We would love to be rid of this interest.”
Midnight Cry Stable is the racing operation of Shirley Cunningham Jr. and William Gallion, a pair of Kentucky attorneys who are facing a new federal criminal trial in November for their alleged mishandling of the settlement in the prominent fen-phen class-action lawsuit. A previous criminal trial ended in a mistrial earlier this year.
Cunningham and Gallion are also involved in separate civil litigation with some of their former fen-phen clients, over which Crittenden is presiding. Funds from the sale of Tandy's interest in Curlin could go toward a $42-million judgment previously awarded in the civil case against Cunningham, Gallion, and others.
Andre Regard, an attorney representing Tandy, told Crittenden the timing for the imminent sale of the minority interest is suspect, and reminded the judge the civil judgment is under appeal.
“His highest value is as a stallion prospect and not a racehorse,” Regard said. “Stonestreet hasn’t said anything definitive about retiring the horse. If they continue to run the horse, his value is decreased. Until Stonestreet makes a decision to market the horse with some sense of finality, any talk of a sale is premature."
But Getty argued interested buyers are turned off by the “bad odor” attached to Tandy.
“If Tandy is still involved, most people who have high-quality mares are not going to bring their mares to this stud, because of the controversy involved,” he said. “Is there going to be a claim when the foals hit the ground? The pure and simple fact is that the entanglements … make it nearly impossible to stand the horse at stud. It’s not as simple as Mr. Regard makes it.”
Ultimately, Crittenden agreed with the plan proposed by the receiver.
“I am going to approve what the receiver is requesting,” he said. “And that is, we will solicit sealed bids, either through, or not through, a marketing agency, depending on what the cost is. From that, we will get a proposal that the receiver may or may not come back with that the (interest) will be sold.”
Von Saucken said the receiver believes Curlin is a “world champion horse and doesn’t deserve the treatment he has gotten through the legal process. From our perspective, this is the first opportunity to establish what the value is.”
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