Tuesday, August 18, 2009
Thanks to my friend Jeff Seder, of EQB, Inc., for bringing this to my attention:
The judge in the Magna Entertainment bankruptcy case has ruled that Magna Entertainment's creditors (which includes just about everybody in the racing industry) can pursue claims not only against Magna Entertainment itself, but also against its chairman, Frank Stronach, and against the Stronach-controlled company, MI Developments, that was the nominal parent of Magna Entertainment. The full story is here.
As readers of this blog already know, Magna Entertainment, which holds such major league racing properties as Santa Anita, Gulfstream, Laurel and Pimlico, filed for bankruptcy some months ago. For years, Magna Entertainment was propped up by a series of loans and equity ifusions from MI Developments (MID), often over the protests of minority shareholders in MID, who rightly accused Stronach of using that company to toss good money after bad to support Stronach's dreams of a thoroughbred racing empire.
Bankruptcy judge Mary Walrath, in Delaware, allowed the Magna Entertainment creditors committee to move forward with its effort to prove that some $125 million in MID injections into Magna Entertainment were, in the terms of the bankruptcy code, fraudulent transactions. Good news for the creditors, bad news for Frank and his compliant MID directors.
Much more is sure to emerge in the coming months.