Judge denies approval of Tepper Co. bankruptcy plan in failed Rock Hill Panthers site
A judge has denied approval of a bankruptcy plan proposed by a David Tepper-owned company that would pay creditors in the failed team headquarters project in Rock Hill.
Bankruptcy Judge Karen Owens during a hearing Wednesday did not approve the GT Real Estate (GTRE) plan that documents and court statements show would essentially end the case and all lawsuits associated with it. The hearing was held in-person and by video conference from Delaware federal court.
Without judicial approval, no creditors, including the taxpayers of York County and Rock Hill, can be paid.
However, lawyers for GTRE, York County, Rock Hill and contractors agreed to continue negotiations and discussions, officials and lawyers said in court.
GTRE, or GT Real Estate, is the company created by Tepper to oversee what would have been the Panthers NFL team’s headquarters and practice facility in Rock Hill, S.C. The project failed and resulted in GT Real Estate filing for bankruptcy.
GTRE filed bankruptcy in June after construction had stopped in March over a money dispute between GTRE and Rock Hill.
Lawyers for GTRE, York County, Rock Hill, and the general contractor all said during Wednesday’s hearing that they agreed to the overall plan where contractors would get $60 million and York County would get $21 million. Rock Hill would get no cash but have an option to eventually own the land the project sits on. That land is worth more than $20 million.
The sides agreed to adjourn the hearing around noon Wednesday, and continued negotiations until 4 p.m. The hearing reconvened at 4 p.m. but no agreement was reached Wednesday, GTRE lawyer Will Guerrieri said in court. Hearings on the plan were set to resume Thursday afternoon, court officials said.
The disputed part of the plan
GTRE, York County, Rock Hill and the general contractor also agreed that the plan would end (release) all lawsuits and claims in the case, including lawsuits by York County and Rock Hill against GTRE and other Tepper companies. Lawyers for all sides argued in court to accept the plan with the releases in place.
Lawyers for GTRE, Tepper and his companies, and contractors said the releases, described in court as components that would keep the sides out of potential future civil legal action, were crucial negotiations to make the deal.
Dan Fliman, who stated he was a lawyer representing Tepper and affiliated Tepper companies Appaloosa Management, DT Sports Holding, and Tepper Sports Holding, said in court that without the releases, there would have been no plan set for approval.
“We were fending off attacks left and right,” Fliman said.
Fliman said the plan would provide “consensus, peace, and finality.”
Judge questioned legality of releases
Owens said she had concerns about what she described as “non-consensual releases” in the plan, concerning any potential future legal action that could affect other parties connected to the case. Those potential parties were not named in court.
Owens said she understands why the sides in court Wednesday want the releases, but as the plan stands the releases, in her opinion, do not pass a legal standard set by past court cases.
Owens said the releases likely could be drafted a different way that could possibly pass judicial scrutiny.
DOJ objections to releases
In the Wednesday hearing, a lawyer for the U.S. Trustee voiced objections to releases from potential future court actions.
According to the U.S. Department of Justice, a trustee is appointed in bankruptcy to ensure cases are handled to the benefit of all involved -- including taxpayers.
A trustee in the case voiced objections months ago and again in November as the bankruptcy plan moved forward.
Judge approves Tepper-York County settlement
Owens said Wednesday she approved a settlement between GTRE with York County for over $21 million. That was over road tax money York County sent to GTRE that was used in the project.
Part of that settlement is that all claims and allegations made by York County against GTRE and other Tepper companies would be dismissed and withdrawn, and will later be expunged, according to court statements and documents.
GTRE lawyer Stephen Moeller-Sally said in court the settlement means a “complete and global settlement of all claims” among GTRE, other Tepper companies, and York County.
GTRE acted in good faith in the negotiations, Moeller-Sally said.
“This was an extraordinary action taken by the debtor (GTRE) at no cost to creditors,” Moeller-Sally said in court.
City of Rock Hill, general contractor also want deal
Chuck Gibbs, one of Rock Hill’s lawyers, said in court that Rock Hill and GTRE previously agreed to a settlement worth about $20 million, where the city gets title to the property if the bankruptcy plan is approved.
Gibbs said the settlement between the city and GTRE was essential.
“It was a long and difficult road,” Gibbs said. “We are getting title to the property that frankly is an eyesore and will have to be torn down.”
Contractors and subcontractors would get over $60 million in the settlement with GTRE, Michael Roeschenthaler, lawyer for the general contractor, said in court. All contractors would get at least 90 percent of what was claimed, and some would get the full amount, he said.
Roeschenthaler called the releases “essential” to the plan being passed. He said the general contractor has the authority to back out of the deal if the releases are lost.
Roeschnethaler said the deal is “extraordinary” for all parties, even if it is not perfect.
“Don’t let perfect be the enemy of the good,” Roeschenthaler said. “The plan is not perfect, but it is exceptional.”
This story was originally published December 14, 2022 at 5:52 PM with the headline "Judge denies approval of Tepper Co. bankruptcy plan in failed Rock Hill Panthers site."
