In a calculated move, GT Real Estate Holdings, LLC (“GTRE”), owned by Panthers and Charlotte FC owner David Tepper, has filed for Chapter 11 bankruptcy in Delaware. The move effectively ends the Panthers headquarters project in Rock Hill, South Carolina, and will wind down the GT Real Estate Holdings, LLC’s operations.
How It Got Here
On March 18, GTRE sent the City of Rock Hill (“City”) a notice of default due to the City’s failure to provide $225 million in infrastructure bonds. While the City maintained the position that they were willing to issue the bonds, on March 21, York County passed an alternative fee arrangement, which, if GTRE agreed to it, would have allowed the County to reimburse GTRE through property tax credits over a 30-year period. The City passed a resolution supporting York County’s proposed arrangement.
Clearly, GTRE was not satisfied with the alternative arrangement. Instead of agreeing to the alternative arrangement, GTRE elected to terminate the agreements with the City and York County in April after spending around $170 million on the project. Since then, GTRE has received multiple claims for amounts owed primarily to contractors for their work on the project.
GTRE filing for Chapter 11 bankruptcy is not a surprising move. Citing liabilities between $100 million and $500 million, similar amounts in assets, and up to 49 creditors, the Chapter 11 bankruptcy plan will allow GTRE to wind down the company in an organized manner by selling off assets and then paying off creditors. In addition to using current assets to pay off claims, DT Sports Holding, LLC, will contribute $20 million to the bankruptcy plan to pay off creditors.
With the bankruptcy, GTRE avoids having to litigate multiple lawsuits possibly spread over multiple jurisdictions. Now, creditors have to prove their claims through the bankruptcy court, which requires the creditors to submit their amounts owed and include supporting documentation (proof of work, invoices, etc.).
Another benefit for GTRE is that David Tepper (and his other companies) will be protected. The creditors can only be paid through GTRE’s assets and DT Sports Holding, LLC’s $20 million contribution to the bankruptcy plan.
On the other hand, for contractors, the bankruptcy plan could be a hassle. Proving their claims requires gathering extensive documentation and waiting for the court to approve the disbursement. Even then, if the total debts exceed the assets (or if a creditor cannot prove their amounts owed), then a creditor could wind up with less than a creditor claims to be owed.
As GTRE winds down, the Rock Hill headquarters project is wrapping up, and the Panthers will remain in Charlotte. After this deal went awry, expect David Tepper to look at sites in North Carolina for a new headquarters.