A federal bankruptcy judge has agreed to provide Hawthorne Race Course access to financing needed to start the track's spring Thoroughbred meeting, including nearly $1.4 million overdue to Thoroughbred horsemen.
Judge Timothy Barnes also provisionally okayed funding to pay some simulcast providers who agree to restore service to Hawthorne, a key element of the proposed budget intended to keep racing going. But he said he legally could not approve immediate relief to harness horsemen.
Hawthorne officials said the start of the spring meeting is being pushed back from March 29 to April 19, a change that will require approval by the Illinois Racing Board.
Hawthorne filed for Chapter 11 bankruptcy protection Feb. 27, facing a mountain of debt, returned checks written to horsemen and suspension of its harness racing license. A bankruptcy lender agreed to provide interim funding during proceedings but use of those funds is controlled by the court.
Barnes, who earlier okayed funding of the employee payroll and for conversion of the racing surface from harness to Thoroughbred, said he agreed with arguments that the payment to Thoroughbred horsemen is required on an emergency basis to ensure they will stable and run at Hawthorne.
The track and the Illinois Thoroughbred Horsemen's Association agreed the horsemen would not run if they were not paid $1,108,733 in overdue purse money and $281,844 in checks previously drawn on the purse account that were returned for insufficient funds.
"Are the horsemen 'critical vendors'?" the judge asked. "I would say yes."
He had more difficulty grappling with the simulcast issue. Many providers have shut down their signals to Hawthorne because of non-payment of fees. The budget presented to the court is based on the assumption that selected tracks will begin restoring the signal if paid past-due amounts, pumping revenue into the Hawthorne balance sheet.
Barnes said he will approve payment only if Hawthorne obtains contractual agreement from the providers that they will continue to provide service after payment.
"We don't want them to walk as soon as they're paid," he said. "I don't know a contract is (legally) required. But it's not uncommon. I think it's an appropriate condition here."
He lamented he could not find the harness horsemen "critical vendors" since their season had ended. Barnes said he will consider their plight at the next hearing, set for March 27.
"It's the best I can do. I don't have a magic wand," Barnes said.
Before he could legally approve any disbursements from the bankruptcy financing, Barnes said, he had to be satisfied the value of the track and some related property is sufficient that a sale or refinancing arrangement could generate enough money to satisfy the secured creditors.
Hawthorne attorneys quizzed track president Tim Carey and financial consultant Billy Condon about the potential value, both as real estate and as the potential site of a racino with full table games and slots. Failure to secure funding to build out the casino, authorized by law in 2019, was a key factor in Hawthorne's financial slide.
Carey said he had an unsolicited offer of $1 million an acre for the 107-acre property in 2025, adding, "The timing wasn't right" to do that deal. Another group, he said, was interested in buying the property to build a data center, which would eliminate value attached to a potential casino license.
"If you go and put a racino on the property, which is what we've been trying to do, the value supersedes the $107 million value of those offers," he said.
Condon said financial negotiations continue with multiple parties.
There are still many hurdles to be cleared in the bankruptcy proceedings. A creditors committee, yet to be formed, will have input into an ultimate resolution. And the Illinois Racing Board will have to approve changes in racing schedules and has overall jurisdiction over Hawthorne's racing licenses. The IRB's next meeting is set for March 18.
