DOJ balks at Tepper’s Rock Hill bankruptcy plan; Feds ask judge to block confirmation
The U.S. Department of Justice has asked a federal judge to deny confirmation of a bankruptcy proposal by a David Tepper-owned company connected to the failed Rock Hill, S.C., team headquarters project, court documents show.
The request was made late Tuesday by a bankruptcy court trustee on behalf of the DOJ. A confirmation hearing on the bankruptcy proposal is scheduled for Nov. 16.
“The U.S. Trustee requests that this Court enter an order denying confirmation of the Plan, and granting such other relief that the Court deems just and proper,” the Trustee wrote.
It’s unclear if the request made by federal officials will impact the planned confirmation next week in Delaware bankruptcy court. Judge Karen Owens has not responded to the request.
GT Real Estate is the company Tepper created to develop the headquarters in Rock Hill. Construction was halted last March and GT Real Estate filed bankruptcy in June.
York County and the city of Rock Hill are guaranteed no money in the GT Real Estate bankruptcy plan. Officials for the city and county say they are owed more than $100 million.
Other contractors, together owed at least $60 million, have generally agreed to the GT Real Estate proposal, which would pay the contractors much of what they claim.
York County and Rock Hill have pending lawsuits against Tepper-owned companies over the failed project.
GT Real Estate, York County and Rock Hill have not yet filed any written reaction to the federal government’s denial request. Efforts by The Herald to reach lawyers for GT Real Estate, York County, and Rock Hill for comment were unsuccessful.
Plan would give releases, eliminate claims
The plan proposed by GT Real Estate would take away claims against Tepper companies and give releases to other Tepper companies, without the consent of claim holders. The claim holders would be left with potentially no voice in the process, according to the DOJ trustee.
“Neither the Plan nor solicitation procedures provided any way for holders of claims to avoid giving such releases,” the Trustee wrote.
The proposed bankruptcy plan would put York County and Rock Hill in a class of claimants where there is no guarantee any money would be paid back, according to court testimony and documents.
Last week, Owens, in a court order, gave York County a temporary voting stake of $81 million because the county, and city of Rock Hill, were in danger of being left without a voice in the bankruptcy case. The city has a $20 million voting stake.
Voting stakes in bankruptcy cases are proportionally awarded based on claims of what allegedly is owed. Without a vote, York County and Rock Hill would have faced the possibility of never recouping any money, pending the outcomes of other lawsuits. Those with claims will vote to confirm GT Real Estate’s bankruptcy proposal.
“I am concerned with the danger of disenfranchisement of the county and the city,” Owens said at that time in a court hearing. “It is appropriate for them to have voice.”
York County has alleged in court documents that GT Real Estate and other Tepper companies misused $21 million of county taxpayer money on the project. Rock Hill alleges fraud and dishonesty in its lawsuit against GT.
What is a Bankruptcy Trustee’s role?
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.
“United States Trustee Program is the component of the Department of Justice responsible for overseeing the administration of bankruptcy cases and private trustees,” the DOJ Web site states. “We are a national program with broad administrative, regulatory, and litigation/enforcement authorities whose mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors, and the public.“
A trustee in the case voiced objections months ago as the bankruptcy plan was in its beginning stages, but the plan continued to move toward a vote by creditors.
What happens now?
The fight continues over who will be paid.
- A hearing on bankruptcy plan confirmation is scheduled for Nov. 16, court documents show.
- Creditors -- businesses who say they are owed money from the failed project -- are expected to vote Nov. 16 on GT Real Estate’s bankruptcy proposal.
This story was originally published November 10, 2022 at 10:44 AM with the headline "DOJ balks at Tepper’s Rock Hill bankruptcy plan; Feds ask judge to block confirmation."
