MEC Reorganization Plan Approved by Judge

A Delaware Bankruptcy Court judge April 26 confirmed a reorganization plan submitted by Magna Entertainment Corp., parent company MI Developments, and a committee of unsecured MEC creditors.

The plan, announced in early January, calls for major MEC assets to be transferred to MID, primarily a real estate company. In effect, the entities will remain under the control of MEC chairman Frank Stronach.

Under the reorganization plan, unsecured creditors will receive $89 million in cash and $1.5 million for expenses related to the case.

MID will get Golden Gate Fields and Santa Anita Park in California; Laurel Park and Pimlico Race Course in Maryland; Gulfstream Park and The Villages at Gulfstream Park in Florida; AmTote International; and the XpressBet.com account wagering service.

MID said April 30 is the effective date of the reorganization plan. Company officials already have discussed plans for the two Maryland Jockey Club tracks that involve building the racing program and developing unused land.

“We are thankful that the bankruptcy process is drawing to a close, and we have recovered value for our loans,” MID vice chairman and chief executive officer Dennis Mills said in a statement. “As we proceed to take ownership of the acquired assets, we look forward to implementing individual plans for each asset to improve and maximize their economic values.”

According to the Associated Press, Judge Mary Walrath agreed with MEC officlals that its plan was fair.

“I clearly find that the settlement is well within the range of reasonableness,” she said.

Earlier, a lawsuit filed by the creditors’ committee claimed MID was supplying MEC with money that in effect amount to secured loans. The lawsuit claimed MEC fraudulently transferred more than $125 million in loan payments to a subsidiary of MID in the two years leading up to the company’s Chapter 11 bankruptcy filing in 2009.

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