Settlement Reached in Magna Bankruptcy Case

MI Developments will secure assets of racetracks and betting company.

Creditors of Magna Entertainment Corp. have apparently reached an agreement that will end the racetrack operating company’s bankruptcy case.

According to a report by Bloomberg News, the settlement includes transfer of MEC assets, including three racetracks, to MI Developments, which is controlled by MEC chairman Frank Stronach. Bloomberg reported that unsecured creditors, who are owed as much as $260 million, would receive $96.5 million under the plan announced Jan. 11 in U.S. Bankruptcy Court in Wilmington, Del.

The tracks MEC would keep are Golden Gate Fields and Santa Anita Park in California, and Gulfstream Park in Florida. MEC also would keep its advance deposit wagering system, currently based at The Meadows Racetrack & Casino in Pennsylvania.

MEC earlier sold The Meadows, a harness track, to a casino company.

MID, which will take control of the tracks and, will pay unsecured creditors $76.5 million, with the remainder of the settlement amount coming from the sale of tracks, Bloomberg reported. If the tracks bring an amount that would take the total beyond $96.5 million, the additional funds would also accrue to the unsecured creditors.

Two MEC properties, Laurel Park and Pimlico Race Course in Maryland, are scheduled to be auctioned later in January.

Kenneth Eckstein, a New York attorney representing the creditors, said it is a "fairly complicated plan, but it is one we think we have a general grasp on," according to Bloomberg. He said the agreement would be filed with the court by Feb. 12.