Illinois Harness Horsemen’s Association hoping to be a ‘critical vendor’ in Hawthorne bankruptcy proceedings

by Neil Milbert

Members of the Illinois Harness Horsemen’s Association (IHHA) have their fingers crossed, hoping that when the U.S. Bankruptcy Court in the Northern District of Illinois holds a hearing on March 27 that Judge Timothy Barnes will declare them a “critical vendor,” thereby enabling them to collect the money they are owed by bankrupt Hawthorne Race Course.

“At that time we hope a final order is issued to get horsemen paid for all the bounced checks and the purse account unfrozen,” IHHA executive director Tony Somone said on March 18. “We then hope to be paid on April 4 from the debtor-in-possession financing facility (JDI Loans).”

According to Somone, IHHA members are owed $1.3 million in overdue purse money and $1.2 million to cover the bounced checks. In addition, he said, Hawthorne owes the IHHA $360,000 for seven months of unpaid funding it is legally required to provide to cover the organization’s expenses.

JDI Loans has given the Chicago area’s only remaining racetrack a $16 million 120-day line of credit to pay critical vendors who are among the multitude of creditors pressing Hawthorne for payment. Estimates of the track’s indebtedness range from $100 million and $500 million.

Earlier this month, Judge Barnes approved payments of $1.1 million in overdue purse money and $281,000 in bounced checks owed to members of the Illinois Thoroughbred Horsemen’s Association (ITHA), putting them in the critical vendor category because their meeting that originally was scheduled to begin on March 29 is now expected to get underway on April 19.

“We expect the money to be available either on Friday (March 20) or Monday (March 23),” ITHA executive director Dave McCaffrey said after the Illinois Racing Board’s March 18 meeting.

McCaffrey said he “was upset” that Judge Barnes separated the ITHA and the IHHA in the bankruptcy proceedings, delaying the payments to members of the harness organization: “I even had our attorney go up there [before the judge] and say that ‘our client doesn’t want them to be separated and has no reason to say this other than our client wants to do what’s right.’

“But the judge said the statute wouldn’t let him call the harness guys critical vendors but he could do that for the thoroughbred guys because our meeting was coming up [whereas the next harness meeting isn’t scheduled to start until early November]. Now, I’m hoping they get their money before Hawthorne’s loan expires.”

Hawthorne’s Suburban Downs fall/winter harness meeting lost all 14 of its January and February dates because of the track’s financial woes and the Racing Board suspended its license for “failure to provide documentation demonstrating its financial integrity, and proof that they can maintain minimum standards” mandated by the Illinois Racing Act.

The suspension remains in effect, which makes reimbursement of the overdue purse money and bounced checks a vital step in restoring the license.

At the March 18 Racing Board meeting, Hawthorne president Tim Carey testified that he is committed to a bankruptcy reorganization plan that will keep the family-owned racetrack in business rather than sell it to a land developer.

If the track discontinues racing it will lose the casino license it was awarded by the Illinois Gaming Board in 2019 as part of a massive Illinois gambling expansion law passed by the legislature the previous year.

A portion of the grandstand was torn down in 2020 to begin the $40 million racino project that Carey promised but he has subsequently failed to find a financial partner and the project remains in limbo. Meanwhile, the demolition ruins remain and the firms that did the teardown are among Hawthorne’s multitude of creditors.

Many racing insiders have second-guessed Carey for not erecting a temporary racino to begin funneling a portion of its adjusted gross revenue to harness and thoroughbred horsemen and women until the racino becomes the real deal.

Bally’s has established a temporary casino at the Medinah Temple in Chicago’s downtown River North neighborhood while construction is proceeding on a permanent structure and American Place’s temporary casino is in its third year of operation in Waukegan, a city near the Wisconsin border, prior to this spring’s start of construction for a permanent structure.

Both temporary casinos are making money. The Waukegan facility has exceeded expectations, while the one in Chicago is slightly under pre-opening projections.

Carey’s rationale for not taking the temporary route is that it would be a disappointment for customers and would significantly dampen their enthusiasm to visit his envisioned state-of-the-art $40 million racino “with a horse racing motif” when it eventually opened.