Illinois Harness Horsemen’s Association’s waiting game continues over Hawthorne bankruptcy

by Neil Milbert

While members of the Illinois Thoroughbred Horsemen’s Association (ITHA) are getting the money Hawthorne Race Course owes them, the waiting game continues for Illinois Harness Horsemen’s Association (IHHA) members following the third hearing before Judge Timothy Barnes in the U.S. Bankruptcy Court for the Northern District of Illinois Eastern Division.

Based on what Judge Barnes had said at the prior hearing the previous week harness owners, trainers, and drivers went into the March 10 hearing with reason to believe they’d be categorized as a “critical vendor” and reimbursed for bankrupt Hawthorne’s bounced checks totaling between $580,000 and $700,000 and unpaid purse money in frozen bank accounts.

However, Joel Schechter, a lawyer representing one of Hawthorne’s secured creditors, Latto Capital LLC, objected to the “critical vendor” designation because harness racing isn’t scheduled to resume at the track until November, prompting Judge Barnes to reconsider his earlier assumption.

“After several hours the judge decided that those payments would not be approved immediately and instead would be addressed as part of the next state of the bankruptcy process,” the IHHA said on its website.

“It is important for everyone to understand that this decision does not mean horsemen will not receive the money owed to them. The court is requiring additional review as part of the normal bankruptcy process before approving certain payments and financing.”

Judge Barnes seemed to be on the same page.

“While my overall belief toward the horsemen hasn’t changed, I’m having to work toward that goal under the law,” he said. “It’s the best I can do.”

The next hearing is scheduled for March 27.

The March 29 beginning of the Hawthorne thoroughbred meeting has been delayed because of the Feb. 27 Chapter 11 bankruptcy filing and the new tentative start date, pending the approval of the Illinois Racing Board, is April 19. That meeting is scheduled to run through Nov. 1 after which Hawthorne’s Suburban Downs harness meeting is tentatively scheduled for Nov. 6-Dec. 27.

The reason the harness schedule is tentative is because the Racing Board suspended the Suburban Downs license in January. All 14 programs schedule for that month and February were wiped out and the suspension remains in effect.

Hawthorne’s thoroughbred meeting is not impacted by the Suburban Downs suspension and, because it is scheduled to begin in April, the thoroughbred creditors fall into the “critical vendor” category as do three of Hawthorne’s simulcast partners, Monarch Content Management, Penn Entertainment, and Caesars. These three control the simulcast signals from 13 tracks.

Judge Barnes said resumption of Hawthorne’s incoming and outgoing simulcast signals that were pulled because of non-payment is essential for the betterment of all creditors. The cessation of the signals also impacted Hawthorne’s 13 off-track betting outlets, the Club Hawthorne mobile wagering app andclubhawthorne.com.

Approval of payments to the simulcast creditors is contingent on them signing a written agreement with Hawthorne to resume sending and receiving races for wagering.

Hawthorne has received approximately $16 million from a temporary debtor-in-funding line of credit with JDI Loans, enabling the track that is owned by the Carey family to begin repaying debts estimated at between $100 million and $500,000 to a plethora of creditors. The bankruptcy hearings have revealed that the money owed members of the IHHA and ITHA is the tip of the iceberg.

At the March 10 meeting Judge Barnes approved payment to ITHA members for $1,108,733 in overdue purse money and $281,844 in checks that bounced because of insufficient funds.

Hawthorne’s loan from JDI comes with a string attached — a 120-day term limit. When the term expires Hawthorne’s president/chief executive officer Tim Carey can ask for additional funds to keep operating. If JDI were to decline it would vault to the top of the list of creditors.

Carey said at the latest hearing that in 2025 he had an unsolicited offer of $1 million per acre for the 107-acre track property and that another group was interested in buying the property to build a data center (that would end racing at the Chicago metropolitan area’s only racetrack).

Carey and the members of the IHHA and ITHA continue to hold out hope that Hawthorne will find a partner to convert the track into a racino offering slot machines and table games in addition to horse racing. A portion of the adjusted gross revenue would be funneled to the respective purse accounts.

In 2019, Carey received approval from the Illinois Gaming Board for what he said at the time was a $400 million undertaking and the following year a portion of the grandstand was destroyed to launch the racino project.

But since then, all the teardown has produced is creditors who are among those suing for unpaid bills and an eyesore for fans at the track.

At this stage of the game the racino that would have the potential to take Hawthorne out of bankruptcy looks like a longshot.