Riverhounds to detail Chapter 11 bankruptcy reorganization plan
The companies that own the Pittsburgh Riverhounds professional soccer team and the South Side stadium where it plays hope to be out of bankruptcy by the end of November.
U.S. Bankruptcy Judge Jeffery Deller in Pittsburgh on Friday set Nov. 7 as the final hearing on the Chapter 11 reorganization plans for Riverhounds Acquisition Group LP, which owns and operates the team, and Riverhounds Event Center LP, which owns and operates Highmark Stadium.
“We are definitely headed in the right direction,” said Terrance C. “Tuffy” Shallenberger, the majority owner of both companies.
The reorganization plans describe how the companies plan to change their operations so they can pay off their debts.
The November hearing allows creditors to challenge those plans before Deller decides whether to approve them.
David Fuchs, an attorney for a group of minority owners who are creditors to the companies, said they intend to challenge the feasibility of the plans.
Escaping bankruptcy in the next two months is crucial to the team’s survival, said John Steiner, the attorney representing the companies.
Nothing legally prevents the team from signing players to contracts and striking sponsorship agreements while it’s in bankruptcy, but doing so is much easier out of bankruptcy, he said.
Both companies filed for Chapter 11 bankruptcy in March.
In court documents, they say their decision was partly based on some creditors threatening to file an involuntary bankruptcy action against them and their inability to pay the February and March lease payments on the stadium, which total about $62,700.
One of Shallenberger’s other companies, Shallenberger Investments, loaned the companies more than $2 million in 2013 and 2014 to keep them running before they filed for bankruptcy and has loaned them $1.6 million more during the bankruptcy, according to court documents.
Deller approved motions Friday in both bankruptcies that would have the companies borrow $200,000 more from Shallenberg Investments to cover their operating and legal costs through the end of November.
The two companies’ reorganization plans call for much of that debt to be dropped to the lowest tier, meaning it would only be paid after all other creditors are paid. In return, Shallenberger would emerge with 100 percent of the ownership in the team and stadium.
Determining how much the companies owe is complicated by the fact that some creditors have claims on both companies while others have a claim on one. As is the case with most bankruptcies, the companies have secured creditors, who have the ability to foreclose on the companies’ properties to recover their money, and unsecured creditors, whose best bet of getting repaid is if the companies come out of bankruptcy and become profitable.
In all, the stadium owner reported about $4.5 million and the team reported about $10.2 million in unsecured debts. Whether any of those debts overlap isn’t clear.
Brian Bowling is a staff writer for Trib Total Media.