Home field advantage? David Tepper’s lawyers balk at moving bankruptcy case to SC
Lawyers for a company owned by Carolina Panthers owner David Tepper say in court filings that creditors want a home-field advantage by moving a bankruptcy case to South Carolina from a court in Delaware.
The “true motivation is clearly to gain a litigation advantage and has nothing to do with ‘convenience,’ “ Tepper lawyers wrote Tuesday in bankruptcy court documents.
The court maneuvers have become relevant since Tepper halted work on a proposed headquarters and practice facility in Rock Hill. Construction stopped on that project in March and the Tepper company overseeing the work filed for bankruptcy June 1.
Lawyers for Tepper companies claim the people of Rock Hill, York County and South Carolina have moved on, despite the claim two years ago that the economic impact of the headquarters and practice site would lead to at least $100 million in economic impact for the public.
Taxpayers from Rock Hill and York County are on the hook for at least $41 million in the bankruptcy case, with another $40 million thrown in from South Carolina for an I-77 interchange and road improvements.
Current status of the bankruptcy case
The bankruptcy case currently is in Delaware federal court, where GT Real Estate Holdings was incorporated.
Wilmington, Delaware, site of the court, is over 500 miles from Rock Hill, South Carolina where the Panthers project site sits idle.
Gt Real Estate was created by Tepper to build the site. GT is now in bankruptcy after it claimed the city of Rock Hill failed to issue more than $100 million in bonds for the project. Construction stopped in March, and GT subsequently declared bankruptcy.
Creditors, including dozens of contractors, claim GT owes them more than $80 million. The city of Rock Hill alleges it spent $20 million and York County claims it spent $21 million.
York County has sued Tepper companies and the city of Rock Hill, alleging civil conspiracy by Tepper’s companies and breach of contract by Rock Hill for failing to secure financing. York County wants its $21 million in taxpayer money back, and it wants punitive damages.
Lawyers for the S.C. Department of Transportation, which is still working on the interchange, said in bankruptcy court documents, where they join the request for change of venue, that South Carolina will likely have to pursue legal action to get back money paid out before the Tepper companies filed bankruptcy. SCDOT said it was owed almost $3 million when bankruptcy was filed, court documents show.
“Due to the limited assets available to creditors and the Debtor’s estate, it is likely that SCDOT will have to litigate potential avoidance actions on certain amounts paid prior to the Petition Date,” documents from DOT lawyers in the bankruptcy case state.
But currently, all these issues are in front of a Delaware judge.
Lawyers cite undeniable impact on SC
Mascaro/Barton Malow, the general contractor that alleges $80 million is owed by the Tepper companies, has asked that the bankruptcy case be moved to South Carolina where harmed taxpayers and companies out millions live or work.
“The negative impact the contemplated wind down of the Project will have on the City of Rock Hill and York County, South Carolina, residents and businesses cannot be over stated,” MBM lawyers say in court documents requesting the case be heard in South Carolina. “South Carolina’s strong interest in the litigation that could decide the fate of the Project location within its borders is undeniable.”
Moving the cases to South Carolina also matters for convenience of all parties because the site is in Rock Hill, MBM lawyers stated.
Creditors allegedly owed millions by Tepper companies, including subcontractors who were providing everything from windows to landscaping to toilets to the steel beams sticking out of the ground on the failed project, have joined in the motion to move the case to South Carolina.
Dispute over issuing bonds
In 2020, when the project was announced to the fanfare of cheerleaders and team mascots and politicians and Tepper making speeches, officials said the impact of the headquarters and associated businesses around the team’s practice site was at least $100 million.
Lawyers for Rock Hill stated that the Panthers touted the project as having a massive impact in the Rock Hill and York County economies for generations. Now the lawyers say the negative impact may last for generations.
Rock Hill has denied in written statements from its lawyers and officials any claim it was required to issue more than $100 million in bonds for the project.
“GTRE (GT Real Estate) touted the Project as being ‘truly transformative for South Carolina,’ “ Rock Hill’s lawyers said in court documents asking the case be moved to South Carolina. “But transformation cuts both ways – both positively and negatively. Once the Tepper Entities unexpectedly and inexplicably pulled up stakes and ceased all funding of GTRE, the Debtor filed this Chapter 11 Case (bankruptcy) in Delaware. To be clear, the outcome of this Chapter 11 Case, the future of the Project, and the resolution of the myriad legal issues involved will have an immediate, demonstrative, and lasting impact on the City, the County, the State and their citizens for years to come.”
The site sits idle as the legal battles go on.
At least two real estate developers have asked Tepper companies about the 240-acre site off Mount Gallant Road near I-77, but no move to buy and develop it has been made, court documents show.
Failed deal a “disappointment” but public has moved on
Tepper, the sole owner of the Panthers, is worth $16 billion, according to Forbes. One of his companies, DT Sports Holding, loaned $20 million to another of his companies, GT Real Estate, to finance the bankruptcy legal bills and other restructuring costs.
The Panthers stadium, offices and headquarters are in Charlotte.
Tepper lawyers claim in court documents that the public has little interest in the bankruptcy case being moved to South Carolina because the project now sits dormant.
Tepper lawyers also claim in court documents that Rock Hill and York County residents are not clamoring for answers on the bankruptcy.
“MBM (the general contractor) vastly overstates the local interests of South Carolina,” Tepper lawyers wrote in court documents. “MBM’s suggestion that Rock Hill residents will line up to be heard in this case as if it were a local town hall meeting is far-fetched.”
Tepper’s companies say the impact on the economy of Rock Hill and York County is not threatened by keeping the case in Delaware, documents show.
“While the outcome of the Project is certainly a disappointment right now to Rock Hill and the County, the welfare and economic stability of Rock Hill or the County are not under threat,” Tepper companies lawyers write in court documents.
On July 8, Tepper’s companies moved a York County civil lawsuit filed against them in June to South Carolina federal court.
Additionally, Tepper’s companies have said in court documents that they intend to file motions seeking to move the York County lawsuit, which alleged that Tepper companies conspired to misuse money in the project, from its current status in South Carolina federal court to Delaware federal court.
What happens now?
Delaware Bankruptcy federal court judge Karen Owens, who has handled the case for six weeks, has scheduled a hearing in the change of venue request for July 22. It remains unclear if she will rule July 22 on the change of venue that day.
This story was originally published July 13, 2022 at 3:33 PM with the headline "Home field advantage? David Tepper’s lawyers balk at moving bankruptcy case to SC."
