By: Donald L Swanson
2022 has been a bad year for the Carolina Panthers of the National Football League:
- Their practice facility project goes into Chapter 11 bankruptcy on June 1, 2022 (Case No. 22-10505 in the Delaware Bankruptcy Court);
- They fire their coach after only five games (one win against four losses) on October 10, 2022;
- A Chapter 11 plan of reorganization (confirmed on December 16, 2022; Doc. 847) provides for liquidation of their practice facility project; and
- They are eliminated from playoff contention for the fifth straight year.
An August 11, 2022, news story provides this overview.
The Carolina Panthers’ practice facility project in Rock Hill, South Carolina, is owned by GT Real Estate Holdings LLC—a Chapter 11 Debtor that is owned by the same people who own the Panthers.
The Panthers originally planned for the practice facility site to become a regional tourism attraction for sports fans. But financing problems resulted in a termination of the project and the bankruptcy filing.
Disclosure Statement Details
Debtor’s Disclosure Statement, filed in support of Debtor’s confirmed plan of reorganization, provides the following details on what happened.
Debtor exists to own and develop a mixed-use, pedestrian-friendly community, sports, and entertainment venue in Rock Hill, South Carolina, that includes a new headquarters and practice facility for the Carolina Panthers.
The project is announced in 2019, but Debtor does not acquire the 243-acre tract on which to construct the project until March 2020. Debtor breaks ground on the project in July 2020.
The project’s success depends on significant financial and political engagement from the City of Rock Hill and from York County—both of which pledge public support through a series of agreements:
- the City agrees to use reasonable best efforts to issue $225 million in public bonds on or before October 31, 2020, (later extended to February 26, 2021) and the City pays $20 million to Debtor on January 6, 2021; and
- York County grants tax incentives to Debtor, and York County pays $21 million to Debtor on January 19, 2021.
The City never issues any bonds.
Meanwhile, Debtor uses the initial City and York County payments, and many of its own financial resources, to acquire the project site and to fund initial construction costs.
Eventually, Debtor runs out of money, and it suspends construction of the project on March 7, 2022.
On March 18, 2022, to protect itself from claims by the City and to preserve its rights against the City for failure to issue bonds, Debtor sends a notice of default to the City with a 30-day cure period. On April 19, 2022, Debtor terminates its agreement with the City, for failure to cure the default.
By that time, $282 million has already been spent to purchase the project site and to fund a substantial portion of the construction costs.
Ultimately, Debtor determines that an orderly wind down of the project is the best path forward.
Debtor enters into a standstill agreement with the City to enable discussions around a consensual resolution of the project, without the threat of imminent litigation.
Debtor makes diligent efforts to satisfy the claims of contractors who had or would be entitled to mechanic’s liens against the project under South Carolina law.
Debtor funds payments of many expenses from various sources. But Debtor does not have the wherewithal to satisfy all legitimate claims.
So, Debtor decides upon a Chapter 11 process to address all claims and disputes in an organized and equitable manner.
On June 2, 2022, Debtor files its voluntary Chapter 11 Petition, with various goals that include:
- providing a centralized and efficient forum for the orderly and safe wind-down, sale or other resolution of the project;
- equitably addressing its legitimate liabilities; and
- preserving the project while working to maximize the value of Debtor’s assets.
Debtor’s owner agrees to provide a debtor-in-possession loan of up to $20 million to fund the reorganization effort.
Debtor’s confirmed plan (Doc. 844) provides that the reorganized Debtor:
- will continue marketing the project site for sale to third parties; and
- will (i) hold the project site, (ii) transfer the project site to a third party, subject to the first lien secured note, and/or (iii) consummate a sale of the project site to a third party.
Bankruptcy is used to address failing efforts in every industry and in every service sector. None is exempt.
It’s surprising, nonetheless, to see bankruptcy in a failed endeavor associated with the National Football League.
But here we are. Surprises never cease.
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