Legacy Cares Inc., the non-profit owner of a bankrupt Phoenix-area sports complex, won a court fight to keep the venue’s planned sale on track after an Arizona judge rejected a federal monitor’s plea to appoint a trustee for the site.
(Bloomberg) — Legacy Cares Inc., the non-profit owner of a bankrupt Phoenix-area sports complex, won a court fight to keep the venue’s planned sale on track after an Arizona judge rejected a federal monitor’s plea to appoint a trustee for the site.
The decision is a victory as well for holders of $280 million in municipal bonds, unsecured creditors and the landlord of the 320-acre complex. The trustee for Vanguard Group, AllianceBernstein Holding LP and other bondholders and other creditors opposed the federal monitor’s request.
Judge Daniel Collins of the US Bankruptcy Court for the District of Arizona ruled that naming a trustee for the complex would “gravely jeopardize” the sale of the facility and it’s ability to continue as a going concern. Legacy Cares asked the court to set a Sept. 18 deadline for bids on the venue and to complete the sale in early October.
“All parties appear to agree on one thing — this estate is losing money at an alarming rate and the estate’s assets must be sold sooner than later,” Collins wrote in an order Wednesday.
The federal monitor argued that an independent fiduciary was necessary to step in because of gross mismanagement, incompetence and dishonesty by the park’s managers.
The complex faced construction delays and labor shortages amid the pandemic. Its opening was pushed back, and when it did start operating in 2022, Covid spikes cut into business. The park lost about a $1 million a month and in May, Legacy Cares filed for bankruptcy.
There was more to Legacy Cares’ financial woes, according to the US monitor.
In a filing last month, the monitor said Legacy Cares improperly lent millions of dollars to firms tied to Randy Miller, the park’s visionary and former manager. The federal monitor alleged Miller misappropriated an undisclosed amount of bond funds and that Legacy Cares used $1.1 million of bond proceeds for the unauthorized purpose of paying a legal settlement.
Kelly Singer, an attorney for Legacy Sports, Miller’s management company, disputed any allegations and claims of wrongful conduct. Legacy Cares fired Legacy Sports in March.
“I want to make a hundred percent clear that the [Legacy] Sports parties categorically deny that they’ve done anything wrong, that they’ve engaged in any inequitable conduct, let alone anything that would arise to the level of a claim or cause of action against them,” Singer said in a July 27 hearing.
Collins said allegations of mismanagement and dishonesty leveled by the US monitor would be investigated by creditors and others.
“The Court (and the UST) intend to make sure any party engaged in wrongdoing before or after the petition date will be held to account,” he said.
Legacy Cares listed $353.3 million in total secured claims and $13.4 million of unsecured claims and assets of $242.3 million when it filed for bankruptcy.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.