The Keene Sentinel: February 25, 2010
A proposed settlement has been reached in the Hinsdale Greyhound Park bankruptcy case that would help reimburse creditors and forgive the former track’s president for an alleged fraudulent property transfer prior to the Chapter 7 filing.
The track closed in December 2008, leaving dozens of racing bettors with an estimated $500,000 in their wagering accounts holding the bag. The track also owes more than $1 million to additional creditors, including other tracks it did business with.
The proposal calls for drawing $400,000 from an escrow account and another $400,000 from the sale of the property at and around the now-defunct track, which includes 106 acres. The $800,000 will be combined with another $286,120 the bankruptcy estate has from the track’s other liquidated assets.
This would give bankruptcy trustee Michael S. Askenaizer $1,086,120 to help repay the track’s debts. A trustee is a third party appointed by the court to administer a debtor’s bankruptcy estate.
“The trustee believes, in his best business judgment, that this settlement with the settling parties is fair and reasonable and in the best interests of the bankruptcy estate,” Askenaizer wrote in the proposal.
As part of the proposed settlement, Askenaizer would agree to not sue Sullivan and his estate for an alleged fraudulent transfer of property to a real estate holding company, subordination of mortgages and a $650,000 promissory note former track president Joseph E. Sullivan 3rd took from the track when it was operational.
Askenaizer wrote in the proposal that while sufficient evidence exists to file and possibly win a lawsuit against Sullivan, doing so would “involve the expenditure of lots of attorneys’ fees and expert fees in order to prevail.”
And even if the lawsuit were successful, Askenaizer said he would have to sell the track’s remaining property, pay off a $2.3 million debt to Sullivan’s business partner Carl B. Thomas and cover property taxes and other costs from carrying the property.
“Given the depressed values of the commercial real estate market in southwestern New Hampshire, where the remaining property is located, the trustee believes refusing this settlement offer and litigating instead is not in the best interests of the estate,” Askenaizer wrote.
Before the bankruptcy filing, Sullivan sold the track’s property and buildings for $3.3 million to Hinsdale Real Estate LLC, a holding company he created with Thomas of Spofford-based Thomas Construction Corp.
The holding company later sold 23 acres to Wal-Mart Stores Inc. for $2.1 million, with $500,000 going into the bankruptcy estate escrow account that, under the settlement proposal, could be used to repay creditors. The rest of the proceeds paid off a portion of Sullivan’s debt from property taxes and loans.
Sullivan still owes Thomas about $2.3 million. The debt is tied to two loans for a total of $2.1 million, plus interest, that Thomas gave to Sullivan. The loans are secured to mortgages against the track property.
The settlement proposal gives Hinsdale Real Estate two years to sell the remaining track property, about 83 acres. The bankruptcy estate will take 65 percent of the sale proceeds until it receives $400,000. The other 35 percent will be used to pay Thomas for the mortgages.
The remaining $100,000 from the escrow account tied to the Wal-Mart land deal will be used to pay outstanding property taxes.
If the land doesn’t sell within two years, the property would go to auction.
A separate agreement under the settlement proposal would give Thomas full control over Hinsdale Real Estate. He plans to purchase Sullivan’s 75 percent interest in the company for $500,000, according to Askenaizer.
Askenaizer and Sullivan’s bankruptcy attorney could not be reached for comment. Sullivan has declined to answer questions about the case.
A hearing on the settlement proposal is slated for March 11 at U.S. Bankruptcy Court in Manchester.