The article below has some additional detail. It sounds like the park will stay open and operating. A friend of mine is a member of a motorcycle club that regularly rents out the track. He had heard that the owners had negotiated a $3 million development grant from the State of NJ to be paid once the park opened, but the state pulled the grant after the fact which left the park operator with little liquidity. That plus the inability to sell off the villas (only sold 8 out of 182) and it was only a matter of time.
<TABLE cellSpacing=0 cellPadding=0 width=640 border=0><TBODY><TR><TD>N.J. Motorsports Park makes prenegotiated Ch. 11 filing by Jamie Mason Updated 02:31 PM, Mar-08-2011 ET </TD></TR><TR><TD style="PADDING-RIGHT: 0px; PADDING-LEFT: 0px; PADDING-BOTTOM: 5px; PADDING-TOP: 10px">New Jersey Motorsports Park LLC has accompanied its bankruptcy filing with a prenegotiated reorganization plan that would give the facility a $2 million equity investment.
Chief Judge Judith H. Wizmur of the U.S. Bankruptcy Court for the District of New Jersey in Camden will consider approval of N.J. Motorsports' interim cash collateral use at a Thursday, March 10, hearing, court papers said. Wizmur will also consider the joint administration of the cases of N.J. Motorsports' affiliates.
The company, which hosts racing events and operates a go-karting facility with local, national and international karting competitions, wants access to its cash collateral so that it can continue its operations while under bankruptcy protection.
Millville, N.J.-based N.J. Motorsports filed for Chapter 11 on Monday with three affiliates. The debtor filed for bankruptcy protection with a term sheet for its prenegotiated reorganization plan, which has not yet been filed with the Camden court.
Under the term sheet, NEI Motorsports LLC will make a $2 million cash infusion into the reorganized company in exchange for an 80.1% equity interest in the reorganized company. NEI Motorsports would give roughly 2.3% of the debtor's reorganized equity to its prepetition owner NJMP Holding Group LLC, lowering its stake to 77.8%.
Secured creditor Merrill Lynch Mortgage Capital Inc., owed $30.35 million in prepetition debt, would receive a $20 million reorganized loan and 19.9% of the debtor's reorganized equity. The lender would also have a $10 million unsecured deficiency claim. The $20 million reorganized debt would consist of a $10 million note A and a $10 million subordinate note. Both notes would mature on Nov. 30, 2014, and would be priced at LIBOR plus 500 basis points. The interest rate can't be less than 5.25% and can't be more than 7.25%, court papers said. The $10 million note A would have a $2 million revolving credit facility portion that would be priced at 7.25%.
The equity investment would be subject to overbids at an auction. Competing bidders would have to offer at least $22.75 million in cash, of which $20.5 million would be used to repay the prepetition debt. NEI Motorsports would receive a $250,000 breakup fee if it does not win the plan investment auction. Unsecured creditors would receive a pro-rata share of $368,000. The plan would pay administrative and priority tax claims in full.
The reorganization plan would cut $10 million in secured debt off its balance sheet, court documents said.
N.J. Motorsports was forced to file for bankruptcy protection after it was unable to keep up with the obligations under its prepetition loan with Merrill Lynch, which caused it to default on the debt. The company had also fallen behind of payments to its vendors, including its medical technician, Millville Rescue Squad. By law, the debtor would not have been able to operate without an emergency medical technician present and the Millville Rescue Squad said that it would not provide its services to the debtor unless it was paid by March 11, court papers said.
N.J. Motorsports racing season is scheduled to start immediately.
The 700-plus acres motorsports park has two road courses, an exclusive club known as the Drivers Club, trackside villa homes and a karting facility where anyone can participate in a motorsport, the debtor's website said. The company has sold eight villa trackside townhouses. It still has 28 partially improved lots and 146 unimproved lots that have been approved for development into villas, court papers said.
N.J. Motorsports has more than 250 employees.
The debtor listed its assets at $100,000 to $500,000 and its liabilities at $10 million to $50 million in its petition. N.J. Motorsports' largest unsecured creditors are Ovations Food Services LP of Philadelphia ($1.23 million), NJMP Holding Group LLC of Millville ($653,042), Cumberland County Empowerment Zone Corp. of Millville ($425,000), Deeb Petrakis Blum & Murphy PC of Philadelphia ($107,967) and Sidley Austin LLP of New York ($67,577).