Magna to declare bankruptcy this week?
DiscreetCat
Moderator
from the Pasadena Star-News:
ARCADIA - Amid growing fears that his Magna Entertainment Corp. will file for bankruptcy this week and cause Santa Anita Park's paymaster accounts to be frozen, company founder and chairman Frank Stronach on Tuesday tried to alleviate concerns among local horsemen.
"MEC is a public company, so I can't make too many comments," Stronach said when reached on his cell phone. "But the horsemen would not have to worry about any of their monies."
Paymaster accounts total $11 million at Santa Anita and $4 million at Golden Gate Fields, a Magna racetrack in Northern California, according to Drew Couto, the head of the Thoroughbred Owners of California.
The accounts contain monies that are earmarked for winning owners, who must pay a percentage of those earnings to jockeys and trainers.
Magna has lost about $500 million the past five years. It is expected to default on a $40 million note with a Canadian bank that is due Thursday, which would cause an additional debt of about $230 million to immediately come due. The $40 million note is "guaranteed by certain assets of Golden Gate Fields and Santa Anita Park," according to a Magna statement.
Sources who asked to remain anonymous said Magna employees were asked to turn in their timecards Monday and are scheduled to be paid today or Thursday - a day or two ahead of their regular Friday payday.
Some owners and trainers expressed fear that Santa Anita would close its doors until a bankruptcy judge sorts through all the legal issues and decides if the paymaster accounts are a beneficiary of horsemen or a Magna asset that could be paid to creditors.
Robert K. Rasmussen, a University of Southern California law professor and expert in corporate reorganization law, said it's unlikely the government would freeze the paymaster's account if Magna declared bankruptcy.
"The court would have the power to freeze it but my guess is that the parties will agree to let the people pull from the fund," Rasmussen said. "It's hard to run a racetrack without horses."
Rasmussen said a reorganization of Magna would likely resemble the 2002 Chapter 11 bankruptcy of United Airlines. In that case, frequent fliers were allowed to hang on to their miles, even though those miles could have easily been frozen in bankruptcy court.
"The cost savings is much less than what they would lose," Rasmussen said.
Should Magna file Chapter 11 before employees are paid, it could jeopardize Santa Anita employee paychecks for as long as three months. However, that scenario is also unlikely based on precedent, Rasmussen said.
"There's not a right but the practice is to pay the wages so that you can keep on running the business," Rasmussen said.
Couto isn't sure it would go that smoothly. He has been in negotiations with local Magna officials the past five days in an effort to have the paymaster accounts transferred to trust accounts held by the Thoroughbred Owners of California.
"We're pretty certain, having been discussing this now with the (California Horse Racing Board) and with local track management, that everything will proceed well, people will get paid and the funds will be segregated by order of the horse racing board and existing law," Couto said. "But this is a strange world, time and economy, and I can't make predictions with certainty."
CHRB Chairman John Harris is trying to work with all parties to ensure that racing is not interrupted. He said the horsemen's account "has jockeys in there, it's got trainers. It's got a lot of people who leave their money there."
"There are several million dollars there, and we're somewhat using it as a bank," Harris said. "So obviously there is a concern that if that were part of a bankruptcy, that would be very adverse. The CHRB feels that is not an asset of the track. It's just being held for the beneficiary of others."
Santa Anita President and CEO Ron Charles said he felt much progress was made Tuesday during meetings between local Magna officials, their lawyers and the TOC.
"I think we are very, very close to accomplishing (the transfer)," he said. "Hopefully, it will be done (today). You never know when a new hurdle will come up, but hopefully we've solved the problem and I think it's going to work out for Santa Anita, Golden Gate and the horsemen."
ARCADIA - Amid growing fears that his Magna Entertainment Corp. will file for bankruptcy this week and cause Santa Anita Park's paymaster accounts to be frozen, company founder and chairman Frank Stronach on Tuesday tried to alleviate concerns among local horsemen.
"MEC is a public company, so I can't make too many comments," Stronach said when reached on his cell phone. "But the horsemen would not have to worry about any of their monies."
Paymaster accounts total $11 million at Santa Anita and $4 million at Golden Gate Fields, a Magna racetrack in Northern California, according to Drew Couto, the head of the Thoroughbred Owners of California.
The accounts contain monies that are earmarked for winning owners, who must pay a percentage of those earnings to jockeys and trainers.
Magna has lost about $500 million the past five years. It is expected to default on a $40 million note with a Canadian bank that is due Thursday, which would cause an additional debt of about $230 million to immediately come due. The $40 million note is "guaranteed by certain assets of Golden Gate Fields and Santa Anita Park," according to a Magna statement.
Sources who asked to remain anonymous said Magna employees were asked to turn in their timecards Monday and are scheduled to be paid today or Thursday - a day or two ahead of their regular Friday payday.
Some owners and trainers expressed fear that Santa Anita would close its doors until a bankruptcy judge sorts through all the legal issues and decides if the paymaster accounts are a beneficiary of horsemen or a Magna asset that could be paid to creditors.
Robert K. Rasmussen, a University of Southern California law professor and expert in corporate reorganization law, said it's unlikely the government would freeze the paymaster's account if Magna declared bankruptcy.
"The court would have the power to freeze it but my guess is that the parties will agree to let the people pull from the fund," Rasmussen said. "It's hard to run a racetrack without horses."
Rasmussen said a reorganization of Magna would likely resemble the 2002 Chapter 11 bankruptcy of United Airlines. In that case, frequent fliers were allowed to hang on to their miles, even though those miles could have easily been frozen in bankruptcy court.
"The cost savings is much less than what they would lose," Rasmussen said.
Should Magna file Chapter 11 before employees are paid, it could jeopardize Santa Anita employee paychecks for as long as three months. However, that scenario is also unlikely based on precedent, Rasmussen said.
"There's not a right but the practice is to pay the wages so that you can keep on running the business," Rasmussen said.
Couto isn't sure it would go that smoothly. He has been in negotiations with local Magna officials the past five days in an effort to have the paymaster accounts transferred to trust accounts held by the Thoroughbred Owners of California.
"We're pretty certain, having been discussing this now with the (California Horse Racing Board) and with local track management, that everything will proceed well, people will get paid and the funds will be segregated by order of the horse racing board and existing law," Couto said. "But this is a strange world, time and economy, and I can't make predictions with certainty."
CHRB Chairman John Harris is trying to work with all parties to ensure that racing is not interrupted. He said the horsemen's account "has jockeys in there, it's got trainers. It's got a lot of people who leave their money there."
"There are several million dollars there, and we're somewhat using it as a bank," Harris said. "So obviously there is a concern that if that were part of a bankruptcy, that would be very adverse. The CHRB feels that is not an asset of the track. It's just being held for the beneficiary of others."
Santa Anita President and CEO Ron Charles said he felt much progress was made Tuesday during meetings between local Magna officials, their lawyers and the TOC.
"I think we are very, very close to accomplishing (the transfer)," he said. "Hopefully, it will be done (today). You never know when a new hurdle will come up, but hopefully we've solved the problem and I think it's going to work out for Santa Anita, Golden Gate and the horsemen."
Comments
you prick gambler , stronach ask you for a quick loan and you say no well i hope your happy ,you ruined it for everybody, :yelling: