October 6, 2011
By: Brenna Working
Yavapai Downs Racetrack’s Chapter 7 bankruptcy filing has presented some challenges for Brian Mullen, the trustee overseeing the case, according to the Arizona-based Daily Courier. It seems the racetrack, which filed for Chapter 7 in mid-July, has significant outstanding debts to the U.S. government (which loaned it $14.5 million to build grounds and a grandstand) as well as other creditors.
As trustee, Mullen is responsible for collecting as much money as possible from the racetrack's bankruptcy estate and distributing that money equitably among the racetrack's creditors. But so far, according to sources, his efforts have been largely in vain.
Most recently, Mullen filed a civil suit against the track's former general manager and finance director, as well as against members of the Yavapai County Farm and Agricultural Association Board. In the suit, Mullen alleges that the board members did not properly oversee the racetrack's financial operations and failed to place sufficient financial controls in place.
The suit also claims that the manager mishandled his obligations as a supervisor. If successful, the suit might allow Mullen to collect money from these parties; he could then redistribute that money among the racetrack's unpaid creditors.
Another of Mullen's collection efforts reported in the Daily Courier includes an attempt to collect on an insurance policy the racetrack held. Apparently, the policy provides coverage for the people named in the lawsuit and has a total value of more than $1 million.
It is unclear at this point whether the insurance company is likely to pay out on the claim, especially because the policy is set to expire at the end of the month. It is also unclear whether the racetrack's assets will be liquidated individually; apparently, at least one investor has expressed interested in taking over the track.
Insiders have reported that Yavapai Downs faces financial troubles after a steady decline in racetrack attendance. Ten years ago, Yavapai Downs opted to take on significant debt to expand its facilities in the hopes of attracting new attendees; apparently, that effort did not work.
Yavapai Downs is located in Prescott Valley, Arizona.
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