Hawthorne Latest: Slight Track Renovation Equipment Delay, Possible Movement On Simulcast Signals

[Wandering Eyes]

One day after the latest hearing in a federal Bankruptcy Court in Chicago over Hawthorne's insolvency dealings, a slight equipment delay puts a question mark over the start of training in preparation for a Spring Thoroughbred meet, but there appears to be movement over important simulcast signals going back online.

According to Illinois Thoroughbred Horsemen's Association (ITHA) President Chris Block, the trucks to haul the dirt surface to the track have been rented, but the loaders needed to move the dirt into the trucks have yet to arrive.

“The conversion of [the track] is on hold until all the equipment arrives and then the project can start,” said Block, Wednesday. “We don't know which day that'll happen, but we're hopeful that will happen the next couple days.”

If the necessary equipment can be hired and in action by Friday, then the track could be ready for training by next Wednesday, Block speculated. A tentative start date for the meet has been pegged at Sunday, Apr. 19.

“That's just a very uncertain timeline, for sure,” said Block.

It's also the latest twist in a story that has unfurled since Hawthorne, and its related companies, filed for a Chapter 11 business reorganization at the end of last month.

The filing is built around a “debtor in possession” financing mechanism, which is when a debtor “keeps possession and control of its assets while undergoing a reorganization under Chapter 11.”

Hawthorne has secured temporary funding of around $16 million from JDI Loans, with a 120-day term limit on these funds.

During Tuesday's bankruptcy hearing, Judge Timothy Barnes agreed that Thoroughbred owners and trainers will soon have access to monies in their track bookkeeper accounts (previously frozen), which includes earnings as well as funds submitted in advance of the meet.

Block said he was unsure exactly when those accounts will be unfrozen. “We're going to stay on top of it daily,” he said.

According to Hawthorne's initial bankruptcy filing, the company's estimated assets are between $50 million and $100 million, while the estimated liabilities are between $100 million and $500 million.

The list of creditors who have the 20 largest unsecured claims are led by Fanatics LLC, a digital sports platform licensed in Florida, which has an unsecured claim of $8.75 million, according to the filing.

There are several entities that had stopped sending its simulcast signal to Hawthorne because of unpaid bills.

This includes The Stronach Group (TSG) owned Monarch Content Management with an unsecured claim of $7.13 million, Casears with a claim of roughly $750k, and Penn National with a claim of slightly more than $491k.

During Tuesday's bankruptcy hearing, said Block, it was discussed that these companies could turn their signals back on pending a written agreement with the track that would see a portion of these monies paid back.

Indeed, Block added that track management had told him Wednesday that on Thursday and Friday, the simulcast signals for Gulfstream Park, Santa Anita and Hoosier Park were scheduled to go back online.

Hawthorne is also responsible for a significant amount in bounced checks between dozens of individuals from the Harness racing world.

More than $1.6 million exists between the bounced checks and existing Thoroughbred accounts, said Block. But coming out of Tuesday's hearing, the funds owed to harness owners and trainers will remain withheld for now.

“The ITHA's attorney argued in court today that owners and trainers on both the Thoroughbred and harness sides should be made whole. But the judge accepted an argument, made by creditors, that the court should prioritize Thoroughbred racing with the limited funds available, given the impending start of our meet,” the ITHA wrote in a Tuesday press release.

If the necessary track renovations are conducted and a Thoroughbred meet is approved, there remain questions over what that meet might look like.

According to Block, there are about 200 Thoroughbreds currently stabled at the track. Other trainers are waiting to potentially ship in.

During last year's meet, there were roughly 640 horses stabled at Hawthorne. “And it was tough to maintain it at that,” said Block, about the meet.

Does he expect that same number of horses this year, if indeed the meet goes ahead?

“To be honest with you, I don't think so,” he said.

Since last year's meet, Illinois horsemen and women haven't reinvested in young stock like they used to, he said. “Not to mention all the negative talk around this. It's probably pushed some horsemen the other way.

“I'm sure there's some new ones here and there,” he added. “But I can't imagine that number's going to go up anywhere over 650. And from my thinking, it's probably going to be under that.”

The next hearing in Hawthorne's bankruptcy proceedings is scheduled for Mar. 17.

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