Auction of Preakness, 2 tracks reset for March 25Postponement follows Magna's filing of reorganization plan
February 20, 2010|By Gus G. Sentementes | firstname.lastname@example.org
The auction of two Maryland horse tracks and the Preakness Stakes race was postponed for another month on Friday - a day after the owner, Magna Entertainment Corp., filed a bankruptcy reorganization plan.
The sale of the Maryland Jockey Club assets, which include Pimlico Race Course and Laurel Park, was scheduled for Tuesday but postponed until March 25 by a bankruptcy court judge in Delaware. A Friday hearing on the state of Maryland's assertion that it has a "right of first refusal" in the club's assets was canceled and expected to be rescheduled for mid-March.
State officials have fought to make sure the Preakness, the second leg of horse racing's Triple Crown, stays in Maryland during a sale of the Jockey Club's assets. The General Assembly passed emergency legislation last year, signed by Gov. Martin O'Malley, that gives the state authority to review bids and buy the tracks and Preakness through eminent domain.
Magna filed its reorganization plan Thursday after reaching a settlement with unsecured creditors who accused it in a lawsuit of sham financial transactions.
The lawsuit alleged that a Magna subsidiary had propped up the company with equity infusions disguised as secured loans to ensure that its chairman, Frank
, retained control of Magna assets.
Magna fraudulently transferred more than $125 million in loan payments to a subsidiary in the two years leading up to Magna's Chapter 11 filing, the lawsuit alleged. It sought to recharacterize a Magna subsidiary's loan claims as equity interests and to subordinate them to other claims.
In exchange for the lawsuit being dropped, the Magna subsidiary will pay $75 million to holders of allowed general unsecured claims against the company and its debtor affiliates, except the Maryland Jockey Club. Any distributions to creditors of the Jockey Club would come from the sale of club assets, including the Laurel Park and Pimlico racetracks.
The Associated Press contributed to this article.