Judge Approves $800K for Payment of Hawthorne Purses

Saying he is "trying to make a horrible situation less horrible," the judge hearing the Hawthorne Race Course bankruptcy proceedings has agreed to make $800,000 in past-due purse money available to horsemen who are scrambling to evacuate the track's backstretch by an Aug. 31 deadline. The funding comes from an agreement by attorneys for the various parties to temporarily reallocate funds set aside for their fees to finalize the purse payments. In return, the attorneys were granted priority claims over other assets, at the potential expense of others seeking repayment of debts from a pending $90 million sale of the Hawthorne property. United States Bankruptcy Judge Timothy Barnes made it clear at an Aug. 6 status hearing he was OK'ing the deal reluctantly. "I'm thinking out loud," Barnes said as he considered his options in ranking the competing claims of the parties owed money. He noted Hawthorne officials had testified they had turned down offers higher than $100 million within the past year, but the only bid submitted after bankruptcy was $90 million. As a result, he said, his running calculation of potential repayment to creditors has been thrown into uncertainty. "I'm not happy with where we are. I'm not happy how we got here," he said. Quoting a sentiment expressed earlier in the proceedings, which started with Hawthorne's Feb. 27 filing for Chapter 11 protection, Barnes said, "I'm trying to make a horrible situation less horrible." Hawthorne's long-running financial troubles have caught horsemen coming and going. After the bankruptcy filing, Hawthorne officials scrambled to get enough horses on the grounds to start the track's summer meeting, which was to last through October. But as its budget projections proved optimistic and interim financing dried up, the track failed to pay horsemen purses owed for three Sunday meetings in July, then canceled racing. A sale proceeding for the property found only one bidder, a Delaware-registered limited liability company, which plans to scrap the track for redevelopment. Barnes reluctantly approved that sale, and closing is set for Aug. 31. However, the purchaser said it will back away from the deal if all horses and horsemen have not vacated the backstretch by that date, providing a "free and clear" transfer of the property. Despite assistance from the Illinois Thoroughbred Horsemen's Association, local legislators and various community organizations, relocation efforts in a tight and expensive housing market have been difficult at best. The $800,000 approved at the Aug. 6 hearing is intended to help horsemen move out. "Absent funding, the possibility of closing diminishes," said Michael Brandess, an attorney for the committee of unsecured creditors, whose slim hopes of recovering money from the sale would be further dimmed if the deal falls through. "Nobody wants the horsemen to be harmed," Barnes said. The court has scheduled weekly status hearings. The ITHA has arranged housing fairs and other aid for horsemen but said the track will remain open for training until Aug. 27 or 28.