Information for Creditors of GT Real Estate Holdings, LLC
Case Number 22-10505 in the United States Bankruptcy Court for the District of Delaware
DEBTOR HAD AMBITIOUS PLANS
On June 1, 2022, GT Real Estate Holdings, LLC (the “Debtor”) filed for bankruptcy. Prior to that, it had plans to build a large, mixed-use, pedestrian-friendly community, sports, and entertainment venue in Rock Hill, SC. In its bankruptcy papers, the Debtor’s Chief Restructuring Officer, or CRO, Jonathan Hickman of Alvarez & Marsal North America, LLC, referred to the Debtor’s planned development as the “Project.”
The Project, when completed, would have included a new headquarters and practice facility for the Carolina Panthers, a National Football League team that has common ownership with the Debtor. David Tepper, owner of the Panthers, caused the team to contribute significant funds to the Debtor in an effort to get the Project going.
In pursuit of its goals, the Debtor acquired 234 acres in Rock Hill, York County, South Carolina. Both the City and the County entered into agreements with the Debtor to help it fund and build its project. However, after disputes between the parties, the Debtor made the decision to stop work on the project in March 2022. In bankruptcy, it hopes to protect the assets until they can be sold for the highest possible value.
THE DEBTOR’S PROJECT WAS NOT FUNDED
Although the Debtor put over $282 million into acquiring the land and beginning construction on the Project, it estimates that an additional $500 million or more would be required to complete the work as planned at today’s prices for materials and work. The Debtor has determined that the Project is not feasible and seeks to wind it down in bankruptcy.
One of the primary reasons cited by the Debtor for the failure of the Project is the fact that no low cost public bonds were issued. Specifically, the Debtor states that it had an agreement with the City for the issuance of up to $225 million in public bonds. However, the City never issued any public bonds and the Debtor was not able to raise comparable alternate funding.
Despite investments of $163.5 million from the Carolina Panthers organization via Panthers Football, LLC, and another $7.2 million from other Tepper-affiliated companies, the Debtor determined that it would be unable to complete the Project without the public bonds. So, the Debtor filed for bankruptcy with a focus on ensuring the safety, security, and value of the partially-constructed Project so that it can be sold. The Debtor hopes to distribute the proceeds of the sale equitably among its various creditors.
VENDORS WILL LIKELY BE SHORTED
In the papers that were filed at the beginning of the bankruptcy case, the Debtor’s CRO indicated that the company hoped to distribute assets equitably among the creditors. However, the Debtor does not believe that it will be able to pay everyone in full.
This case is somewhat unique in that the Debtor does not have much secured debt and what little secured debt is there is owed to affiliates. The Debtor believes that it owes between $55 and $90 million to vendors. In comparison, the Debtor states that it owes at least $170 million to affiliates and other insiders. Additionally, the Debtor states that it got $20 million in cash from the City and $21 million from the County. While the Debtor does not believe it is obligated to repay the government entities, the City and County are expected to disagree.
It is rare that vendors have such an opportunity in a bankruptcy case. There are provisions of bankruptcy law that arguably allow unsecured creditors like vendors to be repaid before any money goes to insiders. The best way for creditors to forcefully advocate for repayment is to form a committee of creditors. If you have any questions about this case or committee service, please feel free to contact PRLT.
PRLT does not represent GT Real Estate Holdings, LLC or any of its affiliates. The content on this page is provided for informational purposes only. Nothing on this page or this website creates an attorney/client relationship between you and PRLT. Nothing on this page is legal advice. If you have any questions about the GT Real Estate Holdings bankruptcy case or anything discussed on this page, please contact us.