Creditor’s lawyer in Panthers’ bankruptcy case says investors may not recover much money
Creditors are owed as much as $90 million from the failed Carolina Panthers headquarters project in Rock Hill, bankruptcy court testimony and documents show.
Michael Roeschenthaler said in a federal bankruptcy court hearing Thursday that he does not believe creditors -- including South Carolina taxpayers in Rock Hill and York County -- will recover much of the money. Roeschenthaler is the lawyer who represents the project’s general contractor Mascaro/Barton Malow (MBM).
Thursday was the second day of the federal bankruptcy hearing involving creditors and companies owned by Carolina Panthers owner David Tepper. The hearing was held via Zoom from Delaware.
“I’m very confident that creditors are going to get very little in this case,” Roeschenthaler said in his closing argument as he spoke against what he called a Tepper insider loan of $20 million to finance the bankruptcy. “I have no comfort we are going to see a recovery.”
Roeschenthaler said in court that every part of the bankruptcy was aimed to help David Tepper’s companies, and not the people who spent millions. Documents show MBM is purportedly owed at least $26 million.
The hearing through two days has focused largely on whether the bankruptcy court would allow DT Sports Holdings LLC, a Tepper company, to lend the money to GT Real Estate Holdings, another Tepper company.
”This is the most incestuous case I have ever seen,” Roeschenthaler said Thursday. “Every aspect of this case has the fingerprints of a David Tepper controlled entity.”
Jeffrey Schlerf, the lawyer for DT Sports Holding LLC, balked at any notion there was a problem with one Tepper company gaining anything by lending money to another.
“These are conspiracy theories without evidence,” Schlerf said.
Schlerf said the bankruptcy is a “wind-down” to handle the property’s assets in bankruptcy with no other motive.
GT Real Estate Holdings is the company Tepper created to be the owner and developer of the York County site that now sits idle. The project was hailed to include mixed-use retail and offices and was predicted to be a boon for South Carolina and the region.
GT Real Estate declared bankruptcy June 1 . Construction stopped in March in a dispute between GT and the city of Rock Hill over financing.
Creditors want to ensure market value
In court filings and arguments, MBM said Tepper companies want to control the bankruptcy to the benefit of the companies -- not the creditors.
“If approved, recoveries to creditors will not be dictated by the market value of estate assets. They will be dictated by Tepper,” MBM said in documents. “It is inequitable that Tepper and the Carolina Panthers now seek to commandeer this process through the proposed financing for the primary benefit of those insiders who brought us here in the first place.... Virtually every aspect of this case is tainted by the control of Tepper and the Carolina Panthers.”
Roeschenthalter also said, as of Thursday, all the creditors want the case moved to a court in South Carolina.
The lawyers for York County and Rock Hill agreed in court that the financing deal should not be finalized and that there are concerns over legal releases against DT Sports Holding as the lender in future claims.
Complicated by a second, unrelated lawsuit
Chris Shore, lawyer for GT Real Estate, said one problem with the bankruptcy case is that York County has sued Tepper and his Appaloosa Management investment company in a separate, unrelated lawsuit in South Carolina.
In that unrelated civil lawsuit filed earlier this month, York County sued Appaloosa, DT Sports Holding, Tepper Sports Holding and the city of Rock Hill in an attempt to recoup $21 million. That lawsuit, in which York County described the failed project as the Panthers’ “failed vanity project,” alleges a civil conspiracy by Tepper Sports Holding, DT Sports Holding, and Appaloosa Management.
Also, in that separate lawsuit, York County blames Rock Hill for failing to issue bonds for financing.
Tepper’s companies have not yet filed a written response to that lawsuit in York County civil court, records show. Rock Hill also has not responded.
Yet, that lawsuit came up during Thursday’s hearing. Shore said creditors including York County are trying to “shift the blame.”
“You can’t blame the lender (DT Sports) for asking for a release,” Shore said in court Thursday about the pending South Carolina lawsuit. “We are going to get into who was at fault at a later date....I get it that people have lost a lot of money and invested a lot of money.”
Shore said there are no other investors seeking to loan money for the bankruptcy, and GT Real Estate will be unable to pay even administrative costs without funding to get through bankruptcy.
Testimony Wednesday and Thursday, and documents uncovered by The Herald, showed that at least two real estate ventures have asked GT Real Estate about the 240-acre property but no bids have been made.
Money already spent
Testimony has shown that $282 million was spent on the failed project. That amount included: $163 million came from the Carolina Panthers in loans, $21 million from York County, $20 million from the city of Rock Hill, $15 million from a parking lot sale next to the stadium in downtown Charlotte, and $60 million from DT Sports Holdings, testimony showed.
The Panthers halted the project lauded as worth $100 million in economic impact after a dispute with the city of Rock Hill over financing. The Panthers wanted the city to issue bonds to cover the cost. The city claims in court documents it was not required to issue the bonds as part of the deal.
No decision yet on loan
Judge Karen Owens ruled at the end of Thursday’s court hearing there needs to be some changes to the language and restrictions about the possible $20 million loan from one Tepper company to another.
GT Real Estate has acted in good faith and has hired professionals to develop an exit plan, Owens said. No other lenders have inquired to offer money for the bankruptcy, Owens said.
“We do not know the value of the insider claims,” Owens said Thursday.
Owens said she understands that Schlerf had said previously the $20 million with a deadline of July 6 was a take it or leave it offer.
Creditors want case moved to South Carolina
MBM, York County, Rock Hill and other creditors want the case moved to federal bankruptcy court in South Carolina because the taxpayers and residents of the city, county and South Carolina are the most affected.
A hearing on changing the venue will likely happen on July 22, court officials said.
This story was originally published June 30, 2022 at 5:28 PM.
