New Deal and No Deal in the Panthers-Rock Hill bankruptcy case
ROCK HILL, SC (WBTV) – Carolina Panthers owner David Tepper has taken a new approach to the bankruptcy case of his real estate company that opens up an easy road for contractors but a harder road for taxpayers. Tepper’s GT Real Estate has filed a new reorganization plan that excludes initial offers for Rock Hill and York County. GT Real Estate says the city and county chose tough litigation and unreasonable demands instead.
In the new depositGT Real Estate says the city and county have no claims for the $20 million and $21 million, respectively, that contributed to the project, saying the money was transferred without any obligation.
“Unfortunately, the City and County have instead chosen to pursue a flawed litigation strategy, making exorbitant and unreasonable demands far beyond their rights,” a GTRE spokesperson wrote in a statement.
The new plan submitted by GT Real Estate would require the city and county to pursue the debts through normal bankruptcy court proceedings. According to the filing, York County was seeking to recover more than $80 million, including $43 million in damage to Mt. Gallant Road and $38 million in lost tax revenue. WBTV previously reported that Rock Hill was pursuing a hearing on the 2004 rule to open GT Real Estate to discovery and also filed a new lawsuit seeking damages from GT Real Estate and accusing the company of fraud.
The new reorganization plan would still have to be approved by a judge.
The new filing follows a WBTV investigation that raises questions about whether the bonding deal between Tepper’s company and Rock Hill was doomed from the start. Last week, the City of Rock Hill filed its own lawsuit alleging Tepper’s GT Real Estate had fraudulent intent throughout negotiations that ultimately failed.
The whole deal fell apart with construction halted, defaults issued and GT Real Estate filing for bankruptcy, all in the space of six months in 2022.
In the latest reorganization plan filed earlier this month, GT Real Estate structured a plan it said would fully repay nearly all debtors.
• $60.5 million in cash funded in a settlement trust for the benefit of contractors, subcontractors and general unsecured creditors, which GTRE believes will be sufficient to fully pay all permitted claims;
• $21.165 million in cash to repay York County for all amounts it has contributed to the project, plus interest; and
• $20.0 million or more of the net proceeds available (after cleanup and major claims) from the sale of real estate to make payments to the Town of Rock Hill.
The amount for contractors and subcontractors is the only part that remains intact in the new regime.
In response, Rock Hill City Council voted last Wednesday to file a lawsuit against GT Real Estate, which sent a strong message that they would choose a different option than that offered by Tepper’s company.
The complaint says Tepper’s GT Real Estate company had “conflicting financial demands” by wanting more public investment but refusing to back bonds in case the project went south. The city says GT Real Estate wanted $225 million in bond proceeds, but was only willing to contribute $500 million in private investment.
The city is seeking a jury trial and is seeking actual damages of $20 million, compensatory and punitive damages, and rights to property now controlled by GTRE.
On Tuesday, a WBTV investigation raised questions about whether the project was doomed from the start. The investigation revealed that the amount of bonds accepted by Rock Hill was far more of a public investment than other similar projects and simultaneously bypassed key oversight steps.
Despite the concerns expressed by the City of Rock Hill in its own complaint, the city still signed an agreement after more than eight months of trial and failure to obtain the vital equipment it needed from GT Real Estate to issue the bonds.
In response to the WBTV report, a spokesperson for Rock Hill wrote in an email, “The City Council looks forward to the day when judgment is rendered on the facts that will be presented in court. “
GTRE FULL STATEMENT
“GTRE today filed an amended reorganization plan to respond to stakeholder feedback to the original plan filed in August. GTRE’s original reorganization plan would have paved the way for all creditors, including the city and county, to receive generous payments on an accelerated basis. Trade creditors have engaged constructively with GTRE, and their treatment under the amended plan of reorganization remains unchanged. Unfortunately, the city and county instead chose to pursue a flawed litigation strategy, making exorbitant and unreasonable demands far beyond their rights. Under the amended plan of reorganization, the city and county are treated the same in accordance with their rights under the bankruptcy code and without the concessions that had previously been granted. These changes are intended to prevent the city and county from further undermining the confirmation process and delaying payment of the $60.5 million that has been set aside to pay trade creditors.
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