Hawthorne Race Course officials have asked for an extension of their bankruptcy proceedings through the summer to provide time to sort through offers to purchase the track, either for ongoing racing operations or for industrial development.
They indicated enough interest by racing-related suitors to fuel optimism the last remaining Chicago-area track will not be shuttered and demolished.
Hawthorne bankruptcy attorney Barry Chatz told the Illinois Racing Board's monthly meeting June 17 that the request would push back the sale process from mid-July to mid-August, with a potential auction for the property continuing beyond that.
A hearing was set for June 23.
"There currently are 55 parties (potential bidders) in the data room and four more are in nondisclosure agreements," Chatz said. "Given the extent of the amounts that we believe will be paid for a hopefully ongoing business concern, there is a lot of due diligence that is required by the buyers, as well as they need to come before you all as respect to licensure and other issues.
"We have multiple 'ongoing business concern' parties who are really interested in the racino opportunity, as well as continuing racing. We have tours of the track pretty much daily now with respect to parties who are interested in the business operations and the assets," he said.
"I'm not coming to you without enthusiasm regarding the racino and ongoing horse racing," he added. I'm excited about the potential for the future. When we met last time, I could not even say that to you."
Hawthorne president and CEO Tim Carey noted interest is heightened by the prospect of developing a long-delayed racino on the property. Hawthorne also holds the key to the development of a new harness track in the south Chicago suburbs, although there is some question whether that authority would survive a transfer of ownership.
Under questioning, Chatz admitted Hawthorne will need to extend its "debtor in possession" funding to maintain the current Thoroughbred meeting for an additional month. That will require court approval.
The DIP lender has first call on money from a sale and Judge Timothy Barnes has been meticulous about calculating whether money drawn from that original $20 million loan could reasonably be expected to be repaid from a sale, with a 20% cushion.
While lenders and other creditors look to protect their return, the counterargument is that finding the best offer will maximize the amount available to pay off as many creditors as possible.
"The $20 million is not going to be sufficient," Chatz said. "We're going to need more money. We're going to be asking for it and the parties are aware. There are ways to look to mitigate the costs. There's ways for looking to assure that people aren't further behind the eight ball, as it were.
"But we believe that the parties will ultimately consent to what we need to get through this process. It's in their best interest."
Hawthorne filed for Chapter 11 bankruptcy protection Feb. 27 after its long-term banker froze its accounts, and checks including to both harness and Thoroughbred horsemen began to bounce. The track's harness license also was suspended by the racing board and the start of the Thoroughbred meeting was delayed during the early part of the bankruptcy process.
