By PHILLIP BANTZ
HINSDALE — Wal-Mart is one step closer to buying land that is tied up in legal red tape because its former owner is the bankrupt Hinsdale Greyhound Park.
A bankruptcy trustee has lifted a pending lawsuit attached to the 23 acres off Route 119 in Hinsdale that Wal-Mart wants to buy for $2.1 million to build a Supercenter.
The sale, which has been in the works for about three years, is expected to close Aug. 26.
The track’s president, Joseph E. Sullivan 3rd, and a business partner, Carl B. Thomas of Spofford-based Thomas Construction Corp., are part owners of the holding company that is trying to sell the land to Wal-Mart.
Sullivan and Thomas formed Hinsdale Real Estate LLC a little more than a year before the track filed for Chapter 7 bankruptcy in December 2008.
When the track closed, dozens of bettors were told that an estimated $500,000 in their wagering accounts was lost. Their money had been commingled with the track’s general funds, a practice that the N.H. Racing and Charitable Gaming Commission made illegal shortly after the track closed.
Sullivan’s bankruptcy attorney, John M. Sullivan of Concord, said bettors were kept in the dark so the track, which was in financial turmoil, would have enough money to pay its 49 employees for the last time.
The track also owes more than $1.2 million to other creditors who did business with it, including telephone companies, food vendors and greyhound tracks across the country for simulcast betting.
Joseph Sullivan also took out $650,000 in loans from the track that he hasn’t repaid. He has declined to say where the money went.
As the court-appointed trustee in the track’s bankruptcy case, Michael A. Askenaizer has been selling off the track’s assets to help repay its creditors. He’s also investigating whether the bankruptcy filing involves fraudulent transfers of property, perjury or is an abuse of the bankruptcy system.
The N.H. Attorney General’s Office has cleared Sullivan of any criminal wrongdoing. Some bettors accused him of stealing the money in their accounts.
In looking at Sullivan’s land deal with Hinsdale Real Estate, Askenaizer began to question the relatively low price tag Sullivan attached to the property: $3.3 million for the track’s 106 acres and every building on the property.
Sullivan and Thomas deny that the land deal was fraudulent.
They say the holding company paid a fair price for the land and selling the land was the only way to keep the track afloat during the year before it shut down, because there were no other financing options, according to court documents prepared by Askenaizer.
Because of his concerns about the deal, which remains under investigation, Askenaizer filed a pending lawsuit with the Cheshire County Registry of Deeds on the property. The pending lawsuit warns potential buyers, such as Wal-Mart, that if they purchase the land, they could be implicated in lawsuits stemming from the bankruptcy case.
Wal-Mart said it would back out of the deal if the pending lawsuit was not lifted from the land it wants to buy. This prompted Askenaizer to ask a judge at U.S. Bankruptcy Court in Manchester for permission to lift the pending lawsuit, but only on the property that interests Wal-Mart.
Wal-Mart would be able to buy the land and would be protected from any lawsuits associated with the track’s bankruptcy.
If the deal goes through, $500,000 from the sale must be placed in an escrow account that cannot be touched until the bankruptcy case is resolved. The money could be used to repay creditors.
In his request to remove the pending lawsuit, Askenaizer said he wants the Wal-Mart deal to work because the retail giant’s presence will increase the value of the land surrounding the store, which may help repay the track’s debt.
Askenaizer did not return messages seeking comment.
Jennifer Rood, an attorney for the track’s biggest bettors, also could not be reached.
One of the bettors Rood represents, Herschel Bird of Nevada, stands to lose nearly $140,000 he had in a wagering account at the track.
Bird said he will not fight the Wal-Mart land deal if it helps creditors get paid.